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http://hdl.handle.net/10419/64189
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| Title: | | The paradox of thrift and crowding-in of private investment in a simple IS-LM model  |
| Authors: | | Basu, Deepankar |
| Issue Date: | | 2009 |
| Series/Report no.: | | Working Paper, University of Massachusetts, Department of Economics 2009-14 |
| Abstract: | | This paper derives conditions for two key Keynesian propositions in a simple IS-LM model: (a) the paradox of thrift, and (b) the crowding-in of private investment expenditures by government expenditures. A linear specifcation of the model is then presented as a special case that can be used for empirical analysis. Using data for the US economy for the period 1959 - 2009, time series estimation of the linear model using instrumental variables regression shows that the paradox of thrift and crowding-in are real possibilities, especially in the sub-period, 1974 - 2009, that excludes the Golden Age of capitalism. |
| JEL: | | E12 E20 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Papers, Department of Economics, University of Massachusetts
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