Government Consumption Stabilizes the Economy in the Short Run

Infographic of July 16, 2026

The infographic of DIW Weekly Report 29/2026 showing the economic effects of two fiscal policy measures. On the left, a vertical bar chart compares fiscal multipliers for additional government consumption and tax cuts. The chart indicates that one additional euro of government consumption increases gross domestic product by approximately one euro in the short term, while a one-euro tax cut has a delayed but stronger effect over time. On the right, a timeline illustrates the impact of a one-euro tax cut across three consecutive years, with increasing economic effects represented by monetary values and plus symbols. The graphic uses blue and orange color coding to distinguish the two policy measures and includes explanatory labels, arrows, and numerical values.

Topics: Business cycles , Monetary policy , Taxes

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