Dollars and Jens
Tuesday, January 15, 2008
fiscal stimulus
One relatively neutral way to put $100B into the economy in a single, Keynsian kick is to have the federal government pay, from general funds, the employee portion of the social security tax for three months. If what you're worried about, though, is an employment slowdown driving an economic slowdown, Bryan Caplan notes that Singapore does this right: "When there is a surplus of labor, they cut employers' share of the payroll tax", which, in a sticky-wages world, should bring the labor market back to equilibrium more quickly than would otherwise happen.

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