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On keynesian effects of (apparent) non-keynesian fiscal policies

Listed author(s):
  • Canale Rosaria Rita
  • Foresti Pasquale
  • Marani Ugo
  • Napolitano Oreste

The aim of the paper is to evaluate the robustness of the theory that claims for restrictive effects of expansionary fiscal policy. It shows that such socalled “non-Keynesian effects” may arise as a consequence of a synchronous and opposite monetary policy intervention. The paper demonstrate this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions - in which Central Banks take into account deficit spending as an element that generate inflation expectations. The econometric analysis shows also that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.

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Article provided by Società editrice il Mulino in its journal Politica economica.

Volume (Year): (2008)
Issue (Month): 1 ()
Pages: 5-46

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Handle: RePEc:mul:je8794:doi:10.1429/26965:y:2008:i:1:p:5-46
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