Fiscal Stabilization Policy and Fiscal Institutions

Leith, Campbell; Wren‐Lewis, Simon

doi:10.1093/oxrep/gri033

Cited by 18 publications

(5 citation statements)

References 18 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Natural output is no longer the same thing as Keynes's full employment output equilibrium; rather it is the level of output that would occur under perfectly flexible prices and wages (Leith and Wren-Lewis 2005). In the short run, it is also the level of unemployment that does not accelerate inflation.…”

Section: Fiscal Policy In the New Economic Consensus: Theorymentioning

confidence: 99%

The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?

Tcherneva

2008

SSRN Journal

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTThe monetarist counterrevolution and the stagflation period of the 1970s were among the theoretical and practical developments that led to the rejection of fiscal policy as a useful tool for macroeconomic stabilization and full employment determination. Recent mainstream contributions, however, have begun to reassess fiscal policy and have called for its restitution in certain cases. The goal of this paper is to delimit the role of and place for fiscal policy in the New Economic Consensus (NEC) and to compare it to that of Post-Keynesian theory, the latter arguably the most faithful approach to the original Keynesian message. The paper proposes that, while a consensus may exist on many macroeconomic issues within the mainstream, fiscal policy is not one of them. The designation of fiscal policy within the NEC is explored and contrasted with the PostKeynesian calls for fiscal policy via Abba Lerner's "functional finance" approach. The paper distinguishes between two approaches to functional finance-one that aims to boost aggregate demand and close the GDP gap, and one that secures full employment via direct job creation. It is argued that the mainstream has severed the Keynesian link between fiscal policy and full employment-a link that the Post-Keynesian approach promises to restore.

show abstract

Section: Fiscal Policy In the New Economic Consensus: Theorymentioning

confidence: 99%

The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?

Tcherneva

2008

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…There is a growing body of work on fiscal rules in dynamic stochastic general equilibrium models in which the maintained assumption is that government debt is risk-free Laxton (2009, 2008), Wren-Lewis (2005, 2006), Kirsanova et al (2006b)]. There is room for extending this analysis to models in which government debt may be risky.…”

Section: Discussionmentioning

confidence: 99%

Sovereign Debt Risk Premia and Fiscal Policy in Sweden

Bi¹,

Leeper²

2010

View full text Add to dashboard Cite

show abstract

“…Studies have actually produced results that are contrary to the propositions of the New Consensus in Macroeconomics on the issue of the effectiveness of fiscal policy (Goran Hjelm 2002). Indeed, there have been studies that advocate greater emphasis on fiscal policy as a key economic policy tool in macroeconomic stabilization and that fiscal policy is more effective than previously thought (Simon Wren-Lewis 2000; Christopher Allsopp and David Vines 2005;Paul Krugman 2005;Campbell Leith and Wren-Lewis 2005). We explore these more recent contributions in what follows.…”

Section: The Issuesmentioning

confidence: 96%

Fiscal policy is still an effective instrument of macroeconomic policy

Arestis

2011

Panoeconomicus

View full text Add to dashboard Cite

Recent developments in macroeconomics and macroeconomic policy, what has come to be known as “New Consensus in Macroeconomics”, downgrades the role of fiscal policy and upgrades that of monetary policy. This contribution aims to consider this particular contention by focusing on fiscal policy. We consider fiscal policy within the current “new consensus” theoretical framework, which views fiscal policy as ineffective, and argue that it deserves a great deal more attention paid to it than it has been recently. We review and appraise recent and not so recent theoretical and empirical developments on the fiscal policy front. The possibility of fiscal and monetary policy coordination is proposed and discussed to conclude that it deserves a great deal more attention and careful consideration than it has been given to in the past. Our overall conclusion is that discretionary application of fiscal and monetary policy in a coordinated and focused manner as a tool of macroeconomic policy deserves serious attention paid to it than hitherto

show abstract

Fiscal Stabilization Policy and Fiscal Institutions

Cited by 18 publications

References 18 publications

The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?

The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?

Sovereign Debt Risk Premia and Fiscal Policy in Sweden

Fiscal policy is still an effective instrument of macroeconomic policy

Contact Info

Product

Resources

About