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

Abstract

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.

The Design of Monetary Institutions: An Accounting and Economics perspective

“…The preferences of the poor align with the government here but the former cannot exercise their choices as they lack bargaining power. In a theoretical vein, all this is consistent with Keynes' advocacy of employment generation "on the spot" [18,19]. Keynes did not speak of fiscal policy but public works, effective demand is not the same as aggregate demand.…”

The Two Approaches to Money: Debt, Central Banks, and Functional Finance

“…In particular, we must assume QTM (that also implies full employment), and hence by definition any public policy, makes no sense if we reject the idea that monetary policy is irrelevant to economic growth; as money is not a veil, fiscal policies can be well coordinated with monetary stimulus (Tcherneva 2008). Secondly, if we reject the representative agent hypothesis, specific policies can help specific sectors of the population.…”

“…The new situation also encouraged a revival of old debates such as the long-abandoned question of whether it is effective to use deficit spending policies to spur economic growth and how to fund them. The resumption of functional finance (hereafter also FF)-that started even before the crisis (Goodhart 1998;Arestis and Sawyer 2003;Colander 2003;Forstater 2003)-is now widespread (Tcherneva 2008;Wray 2009c;Aspromourgos 2014). The expression was coined by Abba Lerner in 1943 reflecting the growing awareness of the policy implications of Keynes's General Theory.…”

A Model for Estimating the Number of Taxpayer That Fullfill Mexican Income Law

“…With this, they claim that it will result in social welfare and tributary equality. For more information regarding the study of fiscal policies, reforms, and the application of mathematical methods for studying contributors, the reader is referred to the following studies [16][17][18][19][20][21][22][23][24][25].…”

“…Based on the optimized number of contributors, the product of these variables by the returns, i.e., the maximized result of (19), is compared with the total revenue by ISR, IVA, and IEPS, in this case, considering the LIF of 2016. Maximizing, again, the OF of (19) The above result represents the total expected tax collection for 2016 considering ISR, IVA, and IEPS.…”