IDEAS home Printed from https://ideas.repec.org/a/mes/ijpoec/v41y2012i2p27-41.html
   My bibliography  Save this article

Setting the Wrong Guidelines for Fiscal Policy

Author

Listed:
  • Giuseppe Fontana
  • Malcolm Sawyer

Abstract

The initial mildly Keynesian fiscal policy applied to the 2008 financial crisis in the UK is outlined and the shifts in policy indicated. The focus of this article is on the use of the concept of structural budget deficit and potential output in the formulation of fiscal policy. It is argued that the structural budget deficit is a poorly formulated concept. Further, potential output has taken various meanings, but in the manner in which it is presently used should not be viewed as a desirable level of output nor as a constraint on the level of economic activity. The final section argues that the present government's plans to achieve a nearly balanced structural budget rests on highly optimistic assumptions on the levels of investment and net exports, and are unlikely to be achieved.

Suggested Citation

  • Giuseppe Fontana & Malcolm Sawyer, 2012. "Setting the Wrong Guidelines for Fiscal Policy," International Journal of Political Economy, Taylor & Francis Journals, vol. 41(2), pages 27-41.
    • Handle: RePEc:mes:ijpoec:v:41:y:2012:i:2:p:27-41
    DOI: 10.2753/IJP0891-1916410202
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2753/IJP0891-1916410202
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.2753/IJP0891-1916410202?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:ijpoec:v:41:y:2012:i:2:p:27-41. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MIJP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.