Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105963
Authors: 
Palley, Thomas I.
Year of Publication: 
2012
Series/Report no.: 
IMK Working Paper 96
Abstract: 
The short-run macroeconomic effectiveness of fiscal policy depends on the effect of policy on AD and the effect of AD on output. This paper examines how macroeconomic perspectives (Keynesian, Post Keynesian, monetarist, classical, new classical, and new Keynesian) describe the effect of AD on output, thereby making or denying space for fiscal policy to impact output. The neo-Ricardian hypothesis (NRH) concerns the effect of bond financed deficits on AD. The NRH turns on the microeconomic behavior of households and can therefore hold in principle in both classical and Keynesian models. Recent new Keynesian arguments about fiscal policy being effective at the zero lower bound represent another capital market imperfection critique of the NRH.
Subjects: 
Fiscal policy
Keynesian
Post Keynesian
monetarist
classical
new Keynesian
neo-Ricardian hypothesis
zero lower bound
JEL: 
E6
E62
H3
Document Type: 
Working Paper

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