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On the Limitations of Fiscal Policy: a Radical Kalechian View

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  • Halevi, J.
  • Kriesler, P.

Abstract

Kalecki was one of the co-developers of the principle of effective demand. This was used by many economists, in the post war period, to argue that government fiscal policy could be used to stimulate effective demand and fine tune the economy to reduce cyclical unemployment. Kalecki, however, was always dubioud of this proposition. Initially, he argued that expansionary fiscal policy, in the form of budget deficits, could reduced unemployment, but that to sustain this lower level of unemployment would require ever increasing deficits. Later, in his famous "Political aspects of full employment" Kalecki was much more skeptical of even this positions.

Suggested Citation

  • Halevi, J. & Kriesler, P., 1999. "On the Limitations of Fiscal Policy: a Radical Kalechian View," Papers 99/14, New South Wales - School of Economics.
  • Handle: RePEc:fth:nesowa:99/14
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    References listed on IDEAS

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    Cited by:

    1. Greg Hannsgen, 2014. "Fiscal Policy, Chartal Money, Mark-up Dynamics and Unemployment Insurance in a Model of Growth and Distribution," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 487-523, July.
    2. Greg Hannsgen, 2012. "Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution," Economics Working Paper Archive wp_723, Levy Economics Institute.

    More about this item

    Keywords

    FISCAL POLICY ; MACROECONOMICS;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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