Sticky Budgets

It's not just prices and wages that are sticky, budgets are too. The Council on Foreign Relations points out that U.S. nominal defense budgets hardly ever fall. To get falling budgets as a percent of GDP (let alone falling real budgets) it helps to have inflation or real growth.

All hail (with a little public choice added in), Akerlof, Dickens and Perry.



Comments for this post are closed