In 2019, Kyriakos Mitsotakis, a candidate to be prime minister of Greece, argued that the Greek economy

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In 2019, Kyriakos Mitsotakis, a candidate to be prime minister of Greece, argued that the Greek economy would experience stronger economic growth if the government cut business and personal taxes. According to an article in the Wall Street Journal, he argued that “his tax cuts will pay for themselves via better growth.” In exchange for economic aid from the European Union, Greece had agreed to run a budget surplus (excluding interest payments on its government debt) equal to 3.5 percent of GDP. The article quotes a Greek economist as saying that Mitsotakis’s proposed tax cuts “could lead to Athens missing the [budget surplus] target by up to 1.5 percentage points.” What would explain this difference of opinion about the effects of the tax cuts on the Greek government’s budget surplus?

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Economics

ISBN: 9780135957554

8th Edition

Authors: Glenn Hubbard, Anthony Patrick O Brien

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