In a recession, especially one of this magnitude, the government must be prepared to run large budget deficits in order to stimulate the economy. In this way, people avoid people in the public sector from being dismissed. This means that demand does not decrease further when people in the public sector would otherwise be dismissed. It also means that welfare is not threatened. More people can also be employed in public projects in order to use the money from this employment to stimulate demand.
Left blog
