IDEAS home Printed from https://ideas.repec.org/a/sae/amerec/v36y1992i2p61-65.html
   My bibliography  Save this article

Working Capital Finance and the Balanced Budget Multiplier

Author

Listed:
  • Wen-ya Chang
  • Ching-chong Lai

Abstract

The macroeconomic literature has long agreed that the balanced budget multiplier is positive. By adopting the viewpoints of working capital finance on aggregate supply, this paper reexamines the impact of an expansion in government spending on output with a balanced government budget and finds that the balanced budget multiplier may be negative depending on the extent of the interest-sensitive aggregate supply effects.

Suggested Citation

  • Wen-ya Chang & Ching-chong Lai, 1992. "Working Capital Finance and the Balanced Budget Multiplier," The American Economist, Sage Publications, vol. 36(2), pages 61-65, October.
    • Handle: RePEc:sae:amerec:v:36:y:1992:i:2:p:61-65
    DOI: 10.1177/056943459203600208
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/056943459203600208
    Download Restriction: no
    File URL: https://libkey.io/10.1177/056943459203600208?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
    ---><---

    References listed on IDEAS

    as
    1. Holmes, James M & Smyth, David J, 1972. "The Specification of the Demand for Money and the Tax Multiplier," Journal of Political Economy, University of Chicago Press, vol. 80(1), pages 179-185, Jan.-Feb..
    2. Henry C. Wallich, 1944. "Income-Generating Effects of a Balanced Budget," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 59(1), pages 78-91.
    3. Chang, Wen-Ya & Lai, Ching-Chong & Chu, Yun-Peng, 1990. ""Interest rates, exchange rates, and aggregate supply": A comment," Journal of Macroeconomics, Elsevier, vol. 12(3), pages 501-510.
    4. Smyth, David J, 1970. "Tax Changes Linked to Government Expenditure Changes and the Magnitude of Fluctuations in National Income," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 60-67, Jan.-Feb..
    5. Decaluwe, B & Steinherr, Alfred, 1976. "A Portfolio Balance for a Two-Tier Exchange Market," Economica, London School of Economics and Political Science, vol. 43(17), pages 111-125, May.
    6. Morley, Samuel A, 1971. "Inflation and Stagnation in Brazil," Economic Development and Cultural Change, University of Chicago Press, vol. 19(2), pages 184-203, January.
    7. Shaller, Douglas R, 1983. "Working Capital Finance Considerations in a National Income Theory," American Economic Review, American Economic Association, vol. 73(1), pages 156-165, March.
    8. van Wijnbergen, Sweder, 1983. "Credit policy, inflation and growth in a financially repressed economy," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 45-65.
    9. Sauernheimer, K., 1987. "Interest rates, exchange rates, and aggregate supply," Journal of Macroeconomics, Elsevier, vol. 9(3), pages 451-455.
    10. Holmes, James M. & Smyth, David J., 1979. "Deficit financing, liquidity, and the government budget constraint," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 83-106.
    11. Mitchell, Douglas W., 1984. "Macro effects of interest-sensitive aggregate supply," Journal of Macroeconomics, Elsevier, vol. 6(1), pages 43-56.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wen-Ya Chang & Ching-Chong Lai, 1999. "Efficiency wages and the balanced budget theorem," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(3), pages 314-324, September.
    2. Steinherr, Alfred & Cisotta, Alessandro & Klar, Erik & Sehovic, Kenan, 2006. "Liberalizing Cross-Border Capital Flows: How Effective Are Institutional Arrangements against Crisis in Southeast Asia," Working Papers on Regional Economic Integration 6, Asian Development Bank.
    3. Simplice A. Asongu & Valentine B. Soumtang & Ofeh M. Edoh, 2021. "Financial determinants of informal financial development in Sub-Saharan Africa," Research Africa Network Working Papers 21/077, Research Africa Network (RAN).
    4. Edwards, Sebastian, 1988. "Financial deregulation and segmented capital markets: The case of Korea," World Development, Elsevier, vol. 16(1), pages 185-194, January.
    5. Risikat Oladoyin S. Dauda & Kayode, O. Makinde, 2014. "Financial Sector Development and Poverty Reduction in Nigeria: A Vector Autoregression Analysis (1980-2010)," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(8), pages 1040-1061, August.
    6. Gatut Luhur BUDIONO & Liliana Temirkhanovna BERDIMURATOVA & Jiwa Tribhuana TUNGGADEWI, 2015. "The Imbalance Of Trade Among Countries In The World Nowadays," ECONOMY AND SOCIOLOGY: Theoretical and Scientifical Journal, Socionet;Complexul Editorial "INCE", issue 1, pages 11-18.
    7. Marvasti, A. & Smyth, David J., 1999. "The effect of barter on the demand for money: an empirical analysis," Economics Letters, Elsevier, vol. 64(1), pages 73-80, July.
    8. Sheilla Nyasha & Nicholas M. Odhiambo, 2018. "Financial Development and Economic Growth Nexus: A Revisionist Approach," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(1), pages 223-229, February.
    9. Ranjanendra Narayan Nag & Sayan Baksi & Sayantan Bandhu Majumder, 2015. "Capital Flows, Asset Prices and Output in Emerging Market Economies," Foreign Trade Review, , vol. 50(1), pages 1-20, February.
    10. Andriesz, E. & Asteriou, D. & Pilbeam, K., 2003. "The linkage between financial liberalization and economic development: empirical evidence from Poland," Working Papers 10.11130/jei.2005.20.2.38, Department of Economics, City University London.
    11. Sheilla Nyasha & Nicholas M. Odhiambo, 2017. "Banks, Stock Market Development and Economic Growth in Kenya: An Empirical Investigation," Journal of African Business, Taylor & Francis Journals, vol. 18(1), pages 1-23, January.
    12. Renaud, Bertrand & INU, 1988. "Compounding financial repression with rigid urban regulations : lessons of the Korea housing market," Policy Research Working Paper Series 360, The World Bank.
    13. Christian Lambert Nguena & Roger Tsafack Nanfosso, 2013. "What Drives and Limits Financial Deepening Dynamics? Fresh Empirical-based Policy Lessons for African Sub-Regions," AAYE Policy Research Working Paper Series 13_003, Association of African Young Economists, revised Nov 2013.
    14. Eric Monnet, 2014. "Monetary Policy without Interest Rates: Evidence from France's Golden Age (1948 to 1973) Using a Narrative Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 137-169, October.
    15. Myatt, Anthony & Scarth, William M., 2003. "Is policy perversity consistent with Keynesian business cycles?," Journal of Macroeconomics, Elsevier, vol. 25(3), pages 351-365, September.
    16. Nyasha S. & Odhiambo N. M., 2016. "The Impact of Bank-Based and Market-Based Financial Development on Economic Growth: Time-Series Evidence From the United Kingdom," Global Economy Journal, De Gruyter, vol. 16(2), pages 389-410, June.
    17. Sodokin, Koffi & Djafon, Joseph Kokouvi & Dandonougbo, Yevessé & Akakpo, Afi & Couchoro, Mawuli K. & Agbodji, Akoété Ega, 2023. "Technological change, completeness of financing microstructures, and impact on well-being and income inequality," Telecommunications Policy, Elsevier, vol. 47(6).
    18. Salvatore D'Acunto & Sergio Destefanis & Marco Musella, 2004. "Exports, Supply Constraints and Growth: An Investigation using Regional Data," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(2), pages 167-189.
    19. Tsuruga, Takayuki & Wake, Shota, 2019. "Money-financed fiscal stimulus: The effects of implementation lag," Journal of Economic Dynamics and Control, Elsevier, vol. 104(C), pages 132-151.
    20. Elsa Assidon, 1996. "L' « approfondissement financier » : épargne et crédit bancaires," Revue Tiers Monde, Programme National Persée, vol. 37(145), pages 153-171.

    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:sae:amerec:v:36:y:1992:i:2:p:61-65. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc 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 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: SAGE Publications (email available below). General contact details of provider: http://journals.sagepub.com/home/aex .

    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.