Government Expenditure (Fiscal Policy aka Helicopter Money) Multiplier: -0.01

[MachineGhost]

Yep, just like the monetary policy multiplier mirage, we can now put the fiscal policy multiplier mirage to bed also.

So for every $1 of deficit spending, it reduces GDP by $1.01 based on empirical observations. That's not so surprising since "island time" government (composed of unelected bureaucrats, career politicians and others of that ilk) is an absolutely terrible resource allocator for society compared to the "profit motive" of the private sector, but what is surprising is that this negative fiscal multiplier persists despite the positive income flowing to the net financial assets held by the private sector. Here's some supporting literature (h/t to Stansberry & Hunt):

Estimating the effects of fiscal policy in OECD countries
ftp://ftp.igier.unibocconi.it/wp/2004/276.pdf

An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output
http://www.nber.org/papers/w7269

How big (small?) are fiscal multipliers?
https://www.researchgate.net/profile/Ca ... 648148.pdf

Government Spending Might Not Create Jobs Even during Recessions
https://www.stlouisfed.org/publications ... recessions

[clacy]

Yes this is definitely not rocket science. Government spending will always be less efficient than private sector spending. And more welfare = less productivity.

Most non academics don't need to see extensive studies on these topics, it's so easily understood.