Hostname: page-component-78c5997874-lj6df Total loading time: 0 Render date: 2024-11-05T03:26:51.264Z Has data issue: false hasContentIssue false
  • English
  • Français

The Role and Effectiveness of Fiscal Policy

Published online by Cambridge University Press:  01 January 2023

Neil Hart
Neil Hart*
Affiliation:
School of Economics and Finance, University of Western Sydney
Rights & Permissions [Opens in a new window]

Abstract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

A meaningful discussion of the role and effectiveness of fiscal policy is not possible within the context of the antiquated textbook models, which in their current and likely future form (the ‘New Neo-Classical Synthesis) have been used to endorse the deflationary bias in macroeconomic policy formulation during recent decades. This paper present a critique of the ‘mainstream’ textbook modelling of fiscal policy, and suggests a more meaningful framework in which to consider the role of fiscal policy; a framework which in particular recognises the realities of endogenous money and interest rate targeting by central banks.

Type
Symposium on Monetary and Fiscal Policy in Theory and Practice
Information
The Economic and Labour Relations Review , Volume 16 , Issue 1 , July 2005 , pp. 17 - 41
Copyright
Copyright © The Author(s) 2005

References

Arestis, P. and Sawyer, M. (2003) ‘Reinventing Fiscal Policy’, Journal of Post Keynesian Economics, 26 (1): 3–25.Google Scholar
Aspromourgos, T. (1999), ‘Open-Economy IS-LM and Monetary Policy Conducted by Interest Rate Instrument’, Economic Papers, 18 (1): 33–41.CrossRefGoogle Scholar
Australian Commonwealth Government (2004), Budget Statement 1: Fiscal Strategy and Budget Priorities. Canberra: AGPS.Google Scholar
Australian Commonwealth Treasury (1996), The Macroeconomics of the TRYM Model of the Australian Economy. Modelling Section, Macroeconomic Analysis Branch, Commonwealth Treasury. Canberra: AGPS.Google Scholar
Blanchard, O. (2003), Macroeconomics, New Jersey: Prentice-Hall.Google Scholar
Blundell-Wignall, A., Fahrer, J., and Heath, A. (1993), ‘Major Influences on the Australian Dollar Exchange Rate’ In Blundell-Wignall, A. (Ed) The Exchange Rate, International Trade and the Balance of Payments, Reserve Bank of Australia.Google Scholar
Bell, S. & Wray, T. (2003), ‘Fiscal Effects on Reserves and the Independence of the Fed’, Journal of Post Keynesian Economics, 25 (2): 263–270.Google Scholar
Biefang, I., Mariscal, F. & Howells, (2002), ‘Central Banks and Market Interest Rates’, Journal of Post Keynesian Economics, 24 (4): 569–585.CrossRefGoogle Scholar
Chick, V. (2004), ‘Lost And Found: Some History Of Endogenous Money’, Paper presented at the Eighth Annual Conference of the European Society for the History of Economic Thought (ESHET), Venezia and Treviso 2004.Google Scholar
Chick, V. & Dow, S. (2002), ‘Monetary Policy with Endogenous Money and Liquidity Preference: A Nondualistic Treatment’, Journal of Post Keynesian Economics, 24 (4): 587–606.CrossRefGoogle Scholar
Dombusch, R., Fischer, S. & Startz, R. (2001), Macroeconomics. New York: McGraw-Hill (Eighth Edition).Google Scholar
Fleming, M.J. (1962), ‘Domestic Financial Policies Under Fixed and Under Floating Exchange Rates’ International Monetary Fund Staff Papers, November 1962: 369–379.CrossRefGoogle Scholar
Frankel, J.A. & Razin, A. (1987), ‘The Mundell-Fleming Model a Quarter Century Later’, International Monetary Fund Staff Papers, December: 567–620.CrossRefGoogle Scholar
Galbraith, J.K. (1997), ‘Time to Ditch the NAIRU’, Journal of Economic Perspectives, Vol.11 (1): 33–49.CrossRefGoogle Scholar
Goodhart, C.A.E. (2004), ‘Monetary and Social Relationships’, Paper presented at the Eighth Annual Conference of the European Society for the History of Economic Thought (ESHET), Venezia and Treviso 2004.Google Scholar
Gruen, D., Pagan, A. & Thompson, C. (1999), ‘The Phillips Curve in Australia’, RBA Research Discussion Paper 1999–01: 1–29.Google Scholar
Hicks, J. (1983), ‘IS-LM: An Explanation’, in Fitoussi, J.P. (Ed), Modern Macroeconomic Theory, Oxford and New York: Basil Blackwell: 49–63.Google Scholar
Kenen, P.B. (1985), ‘Macroeconomic Theory and Policy: How the Closed Economy Was Opened’, in Jones, R.W. & Kenen, P.B. Handbook of International Economics, Vol.II, Amsterdam: North Holland: 625–677.Google Scholar
Keynes, J.K. (1936), The General Theory of Employment Interest and Money, London: MacMillan.Google Scholar
Kriesler, P. & Nevile, J.W. (2002), ‘IS-LM in Macroeconomics after Keynes’, in Arestis, P., Desai, M. Dow, S. (Eds), Money, Macroeconomics and Keynes Essays in Honour of Victoria Chick, Volume 1, London: Routledge: 103–114.Google Scholar
Laidler, D. (1999), Fabricating the Keynesian Revolution. Studies of the Interwar Literature on Money, the Cycle, and Unemployment, Cambridge: Cambridge University Press.Google Scholar
Mankiw, N.G. (1993), ‘The New Keynesian Synthesis’, Journal of Economic Perspectives, 7 (1): 5–22.Google Scholar
Mankiw, N.G. (2000), Macroeconomics (Second Edition), New York: Worth Publishers.Google Scholar
Mankiw, N.G. & Romer, D. (1991) New Keynesian Economics, vols. 1 & 2, Cambridge, Mass.: MIT Press Google Scholar
Mitchell, W.F. and Mosler, W. (2002), ‘Fiscal Policy and the Job Guarantee’, Australian Journal of Labour Economics, 5 (2): 243–249.Google Scholar
Mundell, R. (1963), ‘Capital Mobility and Stabilization under Fixed and Flexible Exchange Rates’, Canadian Journal of Economics and Political Science, 29: 475–485.CrossRefGoogle Scholar
Nevile, J.W. (2000), ‘Can Keynesian Policies Stimulate Growth in Output and Employment?’ In Bell, S. (Ed.) The Unemployment Crisis in Australia: Which Way Out?, Cambridge University Press: 149–174.Google Scholar
Palley, T.I. (2002), ‘Endogenous Money: What it is and why it matters’, Metroeconomica, 53 (2): 152–180.CrossRefGoogle Scholar
Piegay, P. (1999–2000), ‘The New and Post Keynesian Analysis of Bank Behaviour: Consensus and disagreement’, Journal of Post Keynesian Economics, 22 (2): 265–284.CrossRefGoogle Scholar
Reserve Bank of Australia [RBA] (2001), ‘The Movement of Interest Rates’, Reserve Bank of Australia Bulletin, October: 12–18.Google Scholar
Reserve Bank of Australia [RBA] (2003), ‘The Reserve Bank's Open Market Operations’, Reserve Bank of Australia Bulletin, June: 1–7.Google Scholar
Robinson, J. (1956), The Accumulation of Capital, London: MacMillan.Google Scholar
Rogers, C. & Neal, P. (1994), Macroeconomics and the Australian Economy, Sydney: Prentice-Hall.Google Scholar
Romer, D. (1996), Advanced Macroeconomics, New York: McGraw-Hill.Google Scholar
Romer, D. (2000), ‘Keynesian Macroeconomic without the LM curve’, Journal of Economic Perspectives, 14 (2): 149–169.CrossRefGoogle Scholar
Salvatore, D. (2001), International Economics, New York: John Wiley.Google Scholar
Sloman, J. & Norris, K. (2002), Macroeconomics, (Second Edition). Sydney: Peason Education.Google Scholar
Snowdon, B. & Vane, H. (1996), ‘The Development of Modern Macroeconomics: Reflections in the Light of Johnson's Analysis After Twenty-Five years’, Journal of Macroeconomics, 18:381–401.CrossRefGoogle Scholar
Stiglitz, J. & Weiss, A. (1981), ‘Credit Rationing in Markets with Imperfect Information’, American Economic Review, 71: 393–410.Google Scholar
Taylor, J.B. (1999), ‘Monetary Policy Guidelines for Employment and Inflation Stability’, in Solow, R.M. & Taylor, J.B. (Eds) Inflation, Unemployment, and Monetary Policy, Cambridge (Mass): Harvard University Press: 29–54.Google Scholar
Taylor, J.B. (2000), ‘Teaching Modern Macroeconomics at the Principles Level, American Economic Review, 90 (2): 90–94.CrossRefGoogle Scholar
Young, W. & Zilberfarb, B.Z. (2000), IS-LM and Modern Macroeconomics, Boston, Dordrecht, Lonon: Kluwer Academic Publishers.CrossRefGoogle Scholar