Iván Carriño (Fundación Libertad y Progreso) pointed me out to an interesting exchange about the Keynesian multiplier. Steven Landsburg writes a post (follow-up here) using Rothbard’s critique (in Man, Economy, and State) of the Keynesian multiplier. Daniel Kuehn criticizes Landsburg’s (and therefore Rothbard’s) example (here, here and here). Paul Krugman also criticizes Landsburg saying that he used a “stupid argument.”
What’s going on? Is Rotbhard’s and Landsburg’s example so ill-founded as Kuehn argues? I’ll briefly summarize Rothbard’s and Landsburg’s example, then Kuehn’s reply and finally what I think has been left out.