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Fiscal Policy, the Sraffian Supermultiplier and Functional Finance

Author

Listed:
  • Peter Skott

    (University of Massachusetts Amherst, USA, and Aalborg University, Denmark)

  • Júlio Fernando Costa Santos

    (Instituto de Economia e Relações Internacionais (IERI), Universidade Federal de Uberlândia (UFU), Brazil)

  • José Luís da Costa Oreiro

    (Universidade de Brasília (UnB) Brazil)

Abstract

Sraffian supermultiplier models (SSM) try to identify autonomous components of demand. The most plausible candidate is government consumption. Descriptively, however, government consumption does not grow at a constant rate, and prescriptively there is no justification for keeping constant the growth rate of government consumption, irrespective of economic performance. An active fiscal policy guided by principles of functional finance can produce more powerful stabilization, avoid overheating and excessive utilization rates, and secure faster adjustments of the growth rate towards its target level.

Suggested Citation

  • Peter Skott & Júlio Fernando Costa Santos & José Luís da Costa Oreiro, 2020. "Fiscal Policy, the Sraffian Supermultiplier and Functional Finance," UMASS Amherst Economics Working Papers 2020-12, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2020-12
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    File URL: https://scholarworks.umass.edu/econ_workingpaper/295/
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    Cited by:

    1. José A. Pérez‐Montiel & Carles Manera, 2022. "Is autonomous demand really autonomous in the United States? An asymmetric frequency‐domain Granger causality approach," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 78-92, February.

    More about this item

    Keywords

    Fiscal Policy; Sraffian Supermultiplier; Functional Finance;
    All these keywords.

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