IDEAS home Printed from https://ideas.repec.org/p/cwl/cwldpp/888.html
   My bibliography  Save this paper

The Macroeconomics of Government Finance

Author

Listed:

Abstract

This is a critical survey of the literature on the implications of government financial policy for economic activity. The central question is whether the choice of how to finance a given path of government expenditures (i.e., through taxes, nonmonetary debt or money creation) has any real effects. We first present measures of the budget deficit and review economists' views, over the past fifty years, of the burden of public debt, of the neutrality of money, and of fiscal and monetary policies. The earlier tradition and the recent literature differ in methodology, and we then discuss the "microfoundations" approach that dominates contemporary macroeconomics. This is followed by an evaluation of recent analyses, both theoretical and empirical, focusing on (I) the Debt Neutrality hypothesis of Robert Barro, (ii) the effects of the choice between tax- and money-financing of government expenditures, and especially the issues of monetary superneutrality and of the Fisher hypothesis, and (iii) the effects of open market operations.

Suggested Citation

  • James Tobin & Michael Haliassos, 1988. "The Macroeconomics of Government Finance," Cowles Foundation Discussion Papers 888, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:888
    Note: CFP 768.
    as

    Download full text from publisher

    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d08/d0888.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wen-ya Chang & Hsueh-fang Tsai, 2006. "On Dynamic Tax Reform with Regime Switching," Public Finance Review, , vol. 34(3), pages 306-327, May.
    2. Karim Azizi & Nicolas Canry & Jean-Bernard Chatelain & Bruno Tinel, 2013. "Government Solvency, Austerity and Fiscal Consolidation in the OECD: A Keynesian Appraisal of Transversality and No Ponzi Game Conditions," Working Papers hal-00818474, HAL.
    3. Alberto Bagnai, 2004. "Keynesian and neoclassical fiscal susteinability indicators, with applications to EMU member countries," Working Papers in Public Economics 75, University of Rome La Sapienza, Department of Economics and Law.
    4. Pierre-Yves Hénin, 1997. "Soutenabilité des déficits et ajustements budgétaires," Revue Économique, Programme National Persée, vol. 48(3), pages 371-395.
    5. Thorbecke, Willem, 2002. "Budget deficits, inflation risk, and asset prices," Journal of International Money and Finance, Elsevier, vol. 21(4), pages 539-553, August.
    6. Borgersen, Trond-Arne & King, Roswitha M., 2014. "Structural origins of debt-sustainability in mature and transition economies: Domar, Balassa–Samuelson and Maastricht," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 101-119.
    7. D'Ecclesia, Rita L. & Zenios, Stavros A., 2005. "Estimation of asset demands by heterogeneous agents," European Journal of Operational Research, Elsevier, vol. 161(2), pages 386-398, March.
    8. Koustas, Zisimos & Serletis, Apostolos, 1999. "On the Fisher effect," Journal of Monetary Economics, Elsevier, vol. 44(1), pages 105-130, August.
    9. Rudi Dornbusch, 1998. "Debt and Monetary Policy: The Policy Issues," International Economic Association Series, in: Guillermo Calvo & Mervyn King (ed.), The Debt Burden and its Consequences for Monetary Policy, chapter 1, pages 3-27, Palgrave Macmillan.
    10. O Bajo-Rubio & C Diaz-Roldan & V Esteve, 2010. "Testing the Fisher effect in the presence of structural change: A case study of the UK, 1966-2007," Economic Issues Journal Articles, Economic Issues, vol. 15(2), pages 1-16, September.
    11. Jamee K. Moudud & Ajit Zacharias, 2000. "Finance in a Classical and Harrodian Cyclical Growth Model," Macroeconomics 0004037, University Library of Munich, Germany.
    12. Chen-Min Hsu, 1995. "Debt Financing, Public Investment, and Economic Growth in Taiwan," NBER Chapters, in: Growth Theories in Light of the East Asian Experience, pages 129-151, National Bureau of Economic Research, Inc.
    13. Jamee K. Moudud & Ajit Zacharias, 1999. "The Social Wage, Welfare Policy, and the Phases of Capital Accumulation," Economics Working Paper Archive wp_291, Levy Economics Institute.
    14. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    15. Thomas I. Palley, 2019. "What's Wrong With Modern Money Theory (MMT): A Critical Primer," FMM Working Paper 44-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    16. Gabor Oblath & Akos Valentinyi, 1993. "Macroeconomic Policy, Liberalization and Transition: Hungary's Case," CASE Network Studies and Analyses 0008, CASE-Center for Social and Economic Research.
    17. Darrat, Ali F & Glascock, John L, 1993. "On the Real Estate Market Efficiency," The Journal of Real Estate Finance and Economics, Springer, vol. 7(1), pages 55-72, July.
    18. Jamee K. Moudud & Ajit Zacharias, "undated". "Whither the Welfare State? The Macroeconomics of Social Policy," Economics Public Policy Brief Archive ppb_61, Levy Economics Institute.
    19. Zeinab Partow, 1995. "Una revisión de la Literatura sobre los Costos de la Inflación," Borradores de Economia 032, Banco de la Republica de Colombia.

    More about this item

    Keywords

    Government spending; fiscal policy; government policy; budget deficit;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

    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:cwl:cwldpp:888. 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: Brittany Ladd (email available below). General contact details of provider: https://edirc.repec.org/data/cowleus.html .

    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.