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The Case for Fiscal Policy

In: Financial Developments in National and International Markets

Author

Listed:
  • Philip Arestis
  • Malcolm Sawyer

Abstract

The case for fiscal policy and for governments to manipulate on their budgets as appropriate with the specific objective of achieving high levels of employment arises from Kaleckian and Keynesian propositions. Put simply, the latter argue that no market mechanisms are in place to ensure that the level of aggregate demand is sufficient for high levels of economic activity (Kalecki, 1939; Keynes, 1936). Even so, many lines of argument have been developed to the effect that budget deficits and fiscal policy are ineffectual and/or have undesired (and undesirable) effects. Indeed, a great deal of work has been undertaken recently on the significance of fiscal consolidation. Countries only have to balance their budgets, run surpluses during the upswing, and expansion is in place (we have rehearsed and rejected many of these arguments in Arestis and Sawyer, 2003).

Suggested Citation

  • Philip Arestis & Malcolm Sawyer, 2006. "The Case for Fiscal Policy," Palgrave Macmillan Books, in: Philip Arestis & Jesus Ferreiro & Felipe Serrano (ed.), Financial Developments in National and International Markets, chapter 6, pages 103-117, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-52237-4_6
    DOI: 10.1057/9780230522374_6
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    Blog mentions

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    1. Bevan or Thatcher: who's relevant?
      by chris dillow in Stumbling and Mumbling on 2008-09-26 16:51:45

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    2. Antonio Afonso & H seyin Sen & Ayse Kaya, 2021. "Government Size, Unemployment and Inflation Nexus in Eight Large Emerging Market Economies," Hacienda Pública Española / Review of Public Economics, IEF, vol. 235(1), pages 133-170, March.
    3. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    4. Angel Asensio, 2008. "(Post) Keynesian alternative to inflation targeting," Post-Print halshs-00335560, HAL.
    5. Jean-Marie Monnier & Bruno Tinel, 2006. "Public debt and redistribution in France (1980 – 2004) [Endettement public et redistribution en France de 1980 à 2004]," Post-Print halshs-00084093, HAL.
    6. Jean-Marie Monnier & Bruno Tinel, 2006. "Endettement public et redistribution en France de 1980 à 2004," Cahiers de la Maison des Sciences Economiques r06006, Université Panthéon-Sorbonne (Paris 1).

    More about this item

    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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