Although the Keynesian multiplier effect of public works is criticized for lack of a microeconomic foundation, it is still taught in most undergraduate courses and believed to be useful for policy makers. However, it has a serious fallacy even if we accept the consumption function. This note...

Experience after the establishment of EMU shows that the behaviour of private consumers differs considerably among member countries and that average and marginal propensities to consume are fairly heterogeneous. In particular, there are clear differences between Germany and the rest of the euro...