For decades Keynesian-type economists and the promoters of big gubmnt have argued that injections of spending by the gubmnt into the spending stream lead to additional rounds of spending, economic growth, and more jobs. I actually used to teach this stuff myself back in the late 1960s and early 1970s, having been raised on Keynesian macroeconomic models.
But by the mid-1970s I had doubts. The models didn't seem to be predicting very well. And by the 1980s I would teach the models only to show how ridiculous their assumptions were. And I always said, "If you want more spending during downturns of the business cycle, then you should also strongly and vocally support gubmnt spending cuts during upticks in the cycle; but that rarely happens."
The Great Recession of 2007-10 has, unfortunately, reignited interest in using gubmnt spending to alleviate the severe problems faced during recessions. Scott Sumner at EconLog puts this nonsense to rest (I hope), linking to this comment by Mark Sadowski:
[R]egressing RGDP growth on CAB change for the non-Euro Area countries, we find the R-squared value is 0.0% (you can’t make this stuff up) with a slope coefficient of 0.05 ...
Or, in plain English, when countries each have a unique monetary policy, THE FISCAL MULTIPLIER IS ZERO! [EE: read the full link to see the entire flow of the argument; this is just the summary.]
That's right. Injecting spending into the economy in countries that have unique monetary policies in general adds nothing to RGDP [real gross domestic product], and hence does nothing to create jobs.
Addendum: Given that increased gubmnt intervention seems to reduce overall RGDP (see pre-Thatcher UK, pre-Pinochet Chile, Venezuela, Argentina, the USSR, China, etc.), there is a very strong case to be made that the long-run Keynesian multiplier for gubmnt spending is often negative.