Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57357 
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dc.contributor.authorWerner, Richard A.en
dc.date.accessioned2011-10-20-
dc.date.accessioned2012-04-20T17:09:16Z-
dc.date.available2012-04-20T17:09:16Z-
dc.date.issued2011-
dc.identifier.piurn:nbn:de:hebis:30:3-241172en
dc.identifier.urihttp://hdl.handle.net/10419/57357-
dc.description.abstractIn 2008, governments in many countries embarked on large fiscal expenditure programmes, with the intention to support the economy and prevent a more serious recession. In this study, the overall impact of a substantial increase in fiscal expenditure is considered by providing a novel analysis of the most relevant recent experience in similar circumstances, namely that of Japan in the 1990s. Then a weak economy with risk-averse banks seemed to require some of the largest peacetime fiscal stimulation programmes on record, albeit with disappointing results. The explanations provided by the literature and their unsatisfactory empirical record are reviewed. An alternative explanation, derived from early Keynesian models on the ineffectiveness of fiscal policy is presented in the form of a modified Fisher-equation, which incorporates the recent findings in the credit view literature. The model postulates complete quantity crowding out. It is subjected to empirical tests, which were supportive. Thus evidence is found that fiscal policy, if not supported by suitable monetary policy, is likely to crowd out private sector demand, even in an environment of falling or near-zero interest rates. As a policy conclusion it is pointed out that by changing the funding strategy, complete crowding out can be avoided and a positive net effect produced. The proposed framework creates common ground between proponents of Keynesian views (as held, among others, by Blinder and Solow), monetarist views (as held in particular by Milton Friedman) and those of leading contemporary macroeconomists (such as Mankiw).en
dc.language.isoengen
dc.publisher|aGoethe University Frankfurt, Center for Financial Studies (CFS) |cFrankfurt a. M.en
dc.relation.ispartofseries|aCFS Working Paper |x2011/26en
dc.subject.jelE51en
dc.subject.jelE62en
dc.subject.jelH30en
dc.subject.jelH60en
dc.subject.jelO42en
dc.subject.ddc330en
dc.subject.keywordCrediten
dc.subject.keywordCrowding Outen
dc.subject.keywordEquation of Exchangeen
dc.subject.keywordFiscal Policyen
dc.subject.keywordJapanen
dc.subject.keywordMonetarismen
dc.subject.keywordMonetary Policyen
dc.subject.keywordQuantity Equationen
dc.subject.stwFinanzpolitiken
dc.subject.stwÖffentliche Ausgabenen
dc.subject.stwWirkungsanalyseen
dc.subject.stwCrowding outen
dc.subject.stwÖffentliche Schuldenen
dc.subject.stwTheorieen
dc.subject.stwJapanen
dc.titleThe unintended consequences of the debt: Will increased government expenditure hurt the economy?-
dc.typeWorking Paperen
dc.identifier.ppn670277045en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:cfswop:201126en

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