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The myth of Rubinomics

Author

Listed:
  • Carlos F. Liard-Muriente
  • Michael Meeropol

Abstract

Purpose - The purpose of this paper is to analyze and understand the Rubinomics hypothesis or the argument that “fiscal discipline” will bring private investment to a growth path as a result of a decrease in real interest rates, during the 1990s in the USA. Design/methodology/approach - The paper relies on a range of previously published works and macroeconomic data to test the Rubinomics hypothesis. Findings - The paper concludes based on data from the experience of the US economy during the 1990s that the evidence does not validate the arguments of Rubinomics. Originality/value - The “crowding-out” debate is an important controversy in macroeconomics. By shedding light over this controversial issue, this paper shows that the US experience during the so-called roaring 1990s, a period of extraordinary “fiscal discipline,” did not follow the classical crowding-out hypothesis.

Suggested Citation

  • Carlos F. Liard-Muriente & Michael Meeropol, 2009. "The myth of Rubinomics," Humanomics: The International Journal of Systems and Ethics, Emerald Group Publishing, vol. 25(3), pages 204-216, August.
  • Handle: RePEc:eme:humpps:v:25:y:2009:i:3:p:204-216
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    References listed on IDEAS

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    1. George T. Abed & Hamid R Davoodi, 2000. "Corruption, Structural Reforms, and Economic Performance in the Transition Economies," IMF Working Papers 00/132, International Monetary Fund.
    2. Chang, Ha-Joon, 2000. "The Hazard of Moral Hazard: Untangling the Asian Crisis," World Development, Elsevier, vol. 28(4), pages 775-788, April.
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