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If you don't know where the peak is, you can't argue that raising taxes will reduce GDP because you don't know if you're going up the hill or down it.
by mattheww 17y ago
If you don't know where the peak is, you can't argue that raising taxes will reduce GDP because you don't know if you're going up the hill or down it.
- mseebach 17y agoAnd that's fine, because that's not the purpose. The purpose is to argue that the relationship isn't linear (as might be intuitively expected), but curved (I don't know what the shape is called). It's impossible to accurately model the economy of a society, but theories like this can help politicians better judge the impact of their policies.