McManus, Richard, Ozkan, Fatma Gulcin orcid.org/0000-0001-7652-1361 and Trzeciakiewicz, Dawid (2018) Expansionary contractions and fiscal free lunches:too good to be true. Scandinavian Journal of Economics. pp. 32-54. ISSN 1467-9442
Abstract
This paper builds a framework to jointly examine the possibilities of both expansionary fiscal contractions (austerity increasing output) and fiscal free lunches (expansions reducing government debt), arguments which in recent debates have been supported by the austerity and stimulus camps, respectively. We propose a new metric quantifying the budgetary implications of fiscal action, a key aspect of fiscal policy particularly at the monetary zero lower bound. We find that austerity needs to be highly persistent and credible in order to be expansionary, and stimulus needs to be temporary, responsive, and well-targeted in order to lower debt. We conclude that neither is likely, especially during periods of economic distress.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 John Wiley & Sons, Inc. All rights reserved. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details. |
Keywords: | Austerity versus stimulus,fiscal policy,zero lower bound |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) |
Depositing User: | Pure (York) |
Date Deposited: | 16 May 2018 16:00 |
Last Modified: | 16 Oct 2024 14:44 |
Published Version: | https://doi.org/10.1111/sjoe.12269 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.1111/sjoe.12269 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:131001 |
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