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

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  • Rosaria Rita Canale
  • Pasquale Foresti
  • Ugo Marani
  • Oreste Napolitano

Abstract

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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Suggested Citation

  • Rosaria Rita Canale & Pasquale Foresti & Ugo Marani & Oreste Napolitano, 2008. "On keynesian effects of (apparent) non-keynesian fiscal policies," Politica economica, Società editrice il Mulino, issue 1, pages 5-46.
    • Handle: RePEc:mul:je8794:doi:10.1429/26965:y:2008:i:1:p:5-46
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    Cited by:

    1. Ugo Marani, 2014. "Economic monetary union and regional divergences: the legacy of Augusto Graziani," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2014(112), pages 159-171.
    2. 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.
    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.

    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • 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

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