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Obviously increasing government spending endlessly will lead to inflation. What I ask is: when can an increase in government spending, when the economy is in a recession, lead to economic growth instead of stagflation?

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  • $\begingroup$ Increasing government spending would lead to economic growth (since gov't spending is a part of the GDP). The question is more like, when would government spending lead to inflation, or, when would government spending not solve stagflation? $\endgroup$ – Art Feb 4 at 3:08
  • $\begingroup$ This question has some wrong assumptions. First, increasing government spending does not necessarily lead to inflation. That only happens if it is done with printed money. Furthermore, it does not necessarily lead to stagnation either, which is necessary for the stagflation you are discussing. $\endgroup$ – BB King Feb 4 at 15:47
  • $\begingroup$ Also I would add GDP growth is not increase in GDP that’s change in level. Asking when spending increases GDP and when it leads to GDP growth are fundamentally different questions. To me it seems that OP is asking for just increase (in level) of GDP $\endgroup$ – 1muflon1 Feb 4 at 16:38

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