Grasping Reality on TypePad, by Brad DeLong

Fiscal Policy and Growth In Europe:

Y = μG + ε_μ : multiplier

G = λY + ε_λ : policy response

Y = ε_μ/(1 - λμ) + με_λ/(1 - λμ)

G = λε_μ/(1 - λμ) + ε_λ/(1 - λμ)

Slope coefficient = μ[σ_λ²/(σ_λ²+σ_μ²)] + (1/λ)[σ_μ²/(σ_λ²+σ_μ²)]

Give me σ_λ², σ_μ²), and λ, and I will tell you what the European multiplier currently is...