The 'Expansionary Fiscal Contraction' Hypothesis: A Neo-Keynesian Analysis
AbstractIt has recently been argued that several fiscal contractions can, through their impact on expectations, lead to growth in consumption, investment, and employment. Since such contractions typically occur because adjustment has been delayed due to fear of aggravating unemployment, the authors examine the hypothesis in a model with wage/price rigidities. The New Classical features of the model, however, allow expectational effects to be taken fully into account. While consumption and investment may rise, the authors find that employment is in all cases likely to fall; this leads them to believe that the so-called 'German view' is overoptimistic. Copyright 1995 by Royal Economic Society.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 47 (1995)
Issue (Month): 2 (April)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Afonso, António, 2007.
"An avenue for expansionary fiscal contractions,"
4593, University Library of Munich, Germany.
- Jim Malley & Hassan Molana, 2002.
"Efficiency Wages, Unemployment and Macroeconomic Policy,"
Dundee Discussion Papers in Economics
126, Economic Studies, University of Dundee.
- Jim Malley & Hassan Molana, 2002. "Efficiency Wages, Unemployment and Macroeconomic Policy," Working Papers 2002_3, Business School - Economics, University of Glasgow.
- Barry, Frank, 2003. "Tax Policy, FDI and the Irish Economic Boom of the 1990s," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 33(2), pages 221-236, September.
- Jerome Creel, 1998. "L'assainissement budgétaire au Danemark entre 1983 et 1986 : l'anti-mythe (in French)," Documents de Travail de l'OFCE 1998-02, Observatoire Francais des Conjonctures Economiques (OFCE).
- Niamh Hardiman, 2013. "Rethinking the political economy of fiscal consolidation in two recessions in Ireland," Working Papers 201316, Geary Institute, University College Dublin.
- António Afonso, 2006.
"Expansionary fiscal consolidations in Europe: new evidence,"
Working Papers Department of Economics
2006/18, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Antonio Afonso, 2010. "Expansionary fiscal consolidations in Europe: new evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 17(2), pages 105-109.
- Afonso, António, 2006. "Expansionary fiscal consolidations in Europe: new evidence," Working Paper Series 0675, European Central Bank.
- Woon Gyu Choi & Michael B. Devereux, 2005. "Asymmetric Effects of Government Spending," IMF Working Papers 05/7, International Monetary Fund.
- AntÃ³nio Afonso, 2007. "Expansionary fiscal consolidations in Europe: part of conventional wisdom?," Money Macro and Finance (MMF) Research Group Conference 2006 50, Money Macro and Finance Research Group.
- Bergman, Michael, 2000. "The 'Expansionary Fiscal Contraction Hypothesis' and Uncertainty About the Permanence of Fiscal Consolidations," Working Papers 2000:2, Lund University, Department of Economics.
- Franck Barry, 2013. "The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland," JRC-IPTS Working Papers JRC83549, Institute for Prospective and Technological Studies, Joint Research Centre.
- António Afonso, 2001. "Non-Keynesian Effects of Fiscal Policy in the EU-15," Working Papers Department of Economics 2001/07, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Hallett, Andrew Hughes & Jensen, Svend E. Hougaard & Richter, Christian, 2005. "The European economy at the cross roads: Structural reforms, fiscal constraints, and the Lisbon Agenda," Research in International Business and Finance, Elsevier, vol. 19(2), pages 229-250, June.
- Gianluigi Giorgioni & Ken Holden, 2003. "Ricardian equivalence, expansionary fiscal contraction and the stock market: a VECM approach," Applied Economics, Taylor & Francis Journals, vol. 35(12), pages 1435-1443.
- McCarthy, F. Desmond, 2001. "Social policy and macroeconomics : the Irish experience," Policy Research Working Paper Series 2736, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
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.