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The Limits of Fiscal Policy

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Anthony J. Makin
added 2 research items
This chapter highlights the role of the money supply and the exchange rate in an open economy aggregate demand-oriented model of fiscal and monetary policy, including analysis of fiscal versus monetary stimulus and the effectiveness of countercyclical fiscal and monetary policy with inflation targeting.
This chapter posits the basic macro-foundations for subsequent analysis. It introduces the classic loanable funds approach, before rendering the Keynesian cross framework underpinning textbook macroeconomics to introduce alternative perspectives on the efficacy of fiscal stimulus and the link between absorption, output and the trade balance.
Anthony J. Makin
added 2 research items
This chapter analyses links between budget and external deficits with reference to the dependent economy approach based on the dichotomy between internationally tradable and non-tradable goods and services.
This chapter provides a critical overview of the Keynesian revival since the Global Financial Crisis. It discusses the G20 fiscal response to the crisis, as well as introducing a range of non-Keynesian perspectives. It also examines the significance of the multiplier and briefly summarises the themes of subsequent chapters.