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

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

Abstract

The aim of this paper is to evaluate the robustness of the theory that claims restrictive effects of expansionary fiscal policy. It shows that such so-called “non-Keynesian effects” may arise from synchronous and opposite monetary policy interventions. The paper demonstrates this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions – in which Central Banks consider deficit spending as an element that generates inflation expectations. Econometric analysis also shows 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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Find related papers by JEL classification:
  • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
  • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
  • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
  • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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Cited by:

  1. Canale, Rosaria Rita & Napolitano, Oreste, 2009. "The recessive attitude of EMU policies: reflections on the italian experience, 1998–2008," MPRA Paper 20207, University Library of Munich, Germany.
  2. Ugo Marani, 2014. "Economic monetary union and regional divergences: the legacy of Augusto Graziani," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2014(112), pages 159-171.
  3. Alberto Botta & Daniele Tori, 2015. "A critique to the expansionary austerity: Theoretical weaknesses and empirical counter evidence," Working Papers PKWP1511, Post Keynesian Economics Study Group (PKSG).
  4. Josef Baumgartner & Serguei Kaniovski & Hans Pitlik, 2010. "Slow Recovery Following Severe Recession. Forecast of the Austrian Economy until 2014," WIFO Monatsberichte (monthly reports), WIFO, vol. 83(1), pages 47-59, January.

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