We now have evidence on how ppl responded to student loan forgiveness, and it largely supports this view (except forgiveness was exempted from taxes). For every dollar of forgiveness, total up front spending inc by 9 cents. 🧵on our new paper here:
Student loan debt forgiveness likely has a multiplier close to zero.
Forgiveness is taxable. If this negative cash flow effect outweighs interest savings would even be net negative. And wealth effect small in short run.
Arbitrary/regressive $1T for ~$0 GDP, not a great idea.