Question: Suppose in the New Monetarist model that there is deficient
Suppose, in the New Monetarist model, that there is deficient financial liquidity. If the fiscal authority were to engineer a tax cut, financed by an increase in the quantity of government debt, with the quantity of outside money held constant, what happens? What does this say about Ricardian equivalence in the New Monetarist model? Discuss.
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