Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 27

President Obama said the following in November 2010 when announcing a two-year pay freeze for civilian federal employees: "After all, small businesses and families are tightening their belts. Their government should too." What do you think the intended effect of this policy would be, assuming the economy was in a recession at the time? Do you think it was the appropriate response? Why or why not?