Imports and the income-expenditure model: implications for fiscal policy and recession fighting
This paper modifies the textbook income-expenditure model to properly account for imports. This modification causes government spending to have an even larger relative impact compared to tax cuts than conventionally thought. It also shows that increased government spending can have a smaller impact on the trade deficit than tax cuts despite spending having a larger multiplier effect on income. Consequently, spending may be doubly advantaged over tax cuts as a means of reflating economic activity. Last, the paper shows that consumption tax cuts can be an antistimulus that reduces aggregate demand and output.
If 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.
Volume (Year): 32 (2009)
Issue (Month): 2 (December)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348|
When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:32:y:2009:i:2:p:311-322. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)The email address of this maintainer does not seem to be valid anymore. Please ask Chris Nguyen to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.