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Is Equity Financed Budget Deficit Stable In An Interest Free Economy?

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  • HASAN, M. AYNUL

    (Department of Economics,)

  • SIDDIQUI, AHMED NAEEM

    (Wolfville, Nova Scotia, and Department of Economics)

Abstract

The purpose of this paper is to analyze the stability of an equity financed budget deficit in an interest free Islamic economy. To this effect a small closed economy theoretical macroeconomic model broadly consistent with the Islamic tenets is developed. This study found that under a strong wealth effect an equity financed deficit is not necessarily unstable and that government expenditure policies may contribute positively in terms of enhancing the output of the economy.

Suggested Citation

  • Hasan, M. Aynul & Siddiqui, Ahmed Naeem, 1994. "Is Equity Financed Budget Deficit Stable In An Interest Free Economy?," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 1, pages 1-14.
    • Handle: RePEc:ris:isecst:0120
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    References listed on IDEAS

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    Cited by:

    1. Tahir, Sayyid, 2013. "Fiscal and Monetary Policies in Islamic Economics: Contours of an Institutional Framework," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 21, pages 1-22.

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