Textbooks and Pure Fiscal Policy: The Neglect of Monetary Basics
AbstractPure fiscal actionsâ€”fiscal actions that leave the money supply unchangedâ€”cannot alter aggregate demand without concomitant support from the monetary sector. At the initial level of output, either the demand for money or the quantity of money demanded must change appropriately. Alternatively, since money demand and money velocity are two sides of the same coin (no pun intended), the velocity of money at the initial level of output must change exogenously or endogenously. Otherwise, aggregate demand is unchanged. This unassailable monetary proposition is consistently ignored in current macro-monetary textbook literature. These authors argue that the monetary sector moderates the expansionary/contractionary thrust of pure fiscal actions, whereas arguments grounded in monetary basics would claim that the monetary sector is the source of whatever expansion/contraction occurs. One must go back upwards of thirty years to find textbook authors correctly incorporating monetary basics in their analysis of pure fiscal actions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Econ Journal Watch in its journal Econ Journal Watch.
Volume (Year): 4 (2007)
Issue (Month): 1 (January)
Pure fiscal policy; monetary basics; IS-LM;
Find related papers by JEL classification:
- A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jason Briggeman) The email address of this maintainer does not seem to be valid anymore. Please ask Jason Briggeman to update the entry or send us the correct address.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.