Fiscal policy, profits and investment: Some additional evidence

ArticleinApplied Economics Letters 15(13):1047-1051 · October 2008with10 Reads
Impact Factor: 0.23 · DOI: 10.1080/13504850600993515 · Source: RePEc

This article provides time series evidence on the effects of fiscal policy on profits and investment in the US. In addition to neoclassical models of investment and profits we also consider Keynesian models. Our findings provide some support for the neoclassical views. However, Keynesian explanations, which allow for the effects of the real interest rate, receive strong support from the data.