The fiscal multiplier measures how much a change in government spending or taxation moves total national income, because an initial round of spending becomes someone else's income, part of which is spent again, and so on. The existence of a multiplier effect was first proposed by Keynes's student Richard Kahn in 1930 and published in 1931, and it became a foundation of Keynesian arguments for using public works and other spending programs to stimulate a depressed economy. Economists continue to debate the size of the multiplier in practice, since it depends on how much of new income is spent rather than saved, how open the economy is to imports, and whether the central bank offsets the spending with tighter monetary policy.
Facts
Origin YearKahn originated the argument in 1930 and published it in 1931; 1931 is used here as the citable publication year. Connections
Associated With
The multiplier itself was introduced by Keynes's student Richard Kahn in 1930/31; Keynes built it into the General Theory's own policy argument.
Source The General Theory of Employment, Interest and MoneyJohn Maynard Keynes
Associated With School
Source The General Theory of Employment, Interest and MoneyJohn Maynard Keynes
Attributed To
Sources
1. Wikipedia
Wikimedia Foundation
The General Theory of Employment, Interest and Money
John Maynard Keynes, 1936Associated With: John Maynard Keynes, Chapter 10
Keynes incorporated Kahn's multiplier into The General Theory's argument for public spending as a remedy for deficient demand.
Associated With School: Keynesian Economics, Chapter 10
The fiscal multiplier is a foundation of Keynesian stimulus arguments.
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