Revisiting Fiscal Multipliers

Traffic Jams and Multipliers, Uneasy Money, 12 Dec 2014
“In the disequilibrium environment of a recession, it is at least possible that injecting additional spending into the economy could produce effects that a similar injection of spending, under “normal” macro conditions, would not produce, just as somehow withdrawing a few cars from a congested road could increase the average speed of all the remaining cars on the road, by a much greater amount than would withdrawing a few cars from an uncongested road. In other words, microresponses may be sensitive to macroconditions.”