Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.003.0005
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter focuses on the use of fiscal and monetary policies (including an analysis of the macroeconomic dimensions of prudential regulations) for a closed economy by contrasting Keynesian, ...
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This chapter focuses on the use of fiscal and monetary policies (including an analysis of the macroeconomic dimensions of prudential regulations) for a closed economy by contrasting Keynesian, heterodox, and conservative perspectives on the effectiveness of various instruments and their ancillary effects. While conservatives believe that fiscal policy is ineffective due to offsetting actions, standard Keynesians believe that government expenditures have a multiplier effect, and heterodox economists believe there may also be a financial accelerator if firms are cash or credit constrained. Similarly, while conservative economists believe that deficit spending maybe be counterproductive and can lead to crowding out and a loss of investor confidence, heterodox and Keynesians believe that there may be crowding in and that a strong economy builds investor confidence. The disagreements extend to views of monetary policy as well where conservatives believe that monetary policy is largely ineffective, Keynesians believe that monetary policy is an important tool in macroeconomic management, and heterodox economists emphasize that credit, and not the money supply, matters for the level of economic activity. Finally, heterodox economists have also designed ways to use prudential regulations as a tool for macroeconomic policy.Less
This chapter focuses on the use of fiscal and monetary policies (including an analysis of the macroeconomic dimensions of prudential regulations) for a closed economy by contrasting Keynesian, heterodox, and conservative perspectives on the effectiveness of various instruments and their ancillary effects. While conservatives believe that fiscal policy is ineffective due to offsetting actions, standard Keynesians believe that government expenditures have a multiplier effect, and heterodox economists believe there may also be a financial accelerator if firms are cash or credit constrained. Similarly, while conservative economists believe that deficit spending maybe be counterproductive and can lead to crowding out and a loss of investor confidence, heterodox and Keynesians believe that there may be crowding in and that a strong economy builds investor confidence. The disagreements extend to views of monetary policy as well where conservatives believe that monetary policy is largely ineffective, Keynesians believe that monetary policy is an important tool in macroeconomic management, and heterodox economists emphasize that credit, and not the money supply, matters for the level of economic activity. Finally, heterodox economists have also designed ways to use prudential regulations as a tool for macroeconomic policy.
Brigitte Granville
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691145402
- eISBN:
- 9781400846443
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691145402.003.0004
- Subject:
- Business and Management, Finance, Accounting, and Banking
In considering the components of effective monetary policies to control inflation, the previous chapters have highlighted the decisive role played by credibility and shown how credibility can be ...
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In considering the components of effective monetary policies to control inflation, the previous chapters have highlighted the decisive role played by credibility and shown how credibility can be established and enhanced through rules-based policy frameworks and independent agencies to implement such regimes. This chapter examines how the same test of credibility, hence supportive public expectations, must also be passed by fiscal policy. For if this fiscal test is failed, even the best designed monetary policy efforts will be unavailing. It also shows how transparent rule-based inflation targets can facilitate resolution of the most intractable fiscal problems. At the time of writing, such problems were most apparent in several of the countries that use the euro. Attempts to address concerns about their solvency by fiscal tightening were having the counterproductive effect of damaging growth, hence further increasing their debt-to-GDP ratios, and all the while raising the likelihood of a social and political backlash against higher taxes and spending cuts.Less
In considering the components of effective monetary policies to control inflation, the previous chapters have highlighted the decisive role played by credibility and shown how credibility can be established and enhanced through rules-based policy frameworks and independent agencies to implement such regimes. This chapter examines how the same test of credibility, hence supportive public expectations, must also be passed by fiscal policy. For if this fiscal test is failed, even the best designed monetary policy efforts will be unavailing. It also shows how transparent rule-based inflation targets can facilitate resolution of the most intractable fiscal problems. At the time of writing, such problems were most apparent in several of the countries that use the euro. Attempts to address concerns about their solvency by fiscal tightening were having the counterproductive effect of damaging growth, hence further increasing their debt-to-GDP ratios, and all the while raising the likelihood of a social and political backlash against higher taxes and spending cuts.
Joseph Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This book discusses the current debates on macroeconomics, capital market liberalization, and development, and develops a new framework within which one can assess alternative policies. The authors ...
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This book discusses the current debates on macroeconomics, capital market liberalization, and development, and develops a new framework within which one can assess alternative policies. The authors share the belief that the Washington consensus has advocated for narrow goals for development (with a focus on price stability), prescribed too few policy instruments (emphasizing monetary and fiscal policies), and places unwarranted faith in the role of markets. The new framework focuses on real stability and long-term sustainable and equitable growth, offers a variety of non-standard ways to stabilize the economy and promote growth, and accepts that market imperfections necessitate government interventions. Economists have traditionally divided their field into macroeconomics and microeconomics, with macroeconomics further divided into stabilization policy and growth. Since most policy discussions and much of the assignment of institutional responsibilities have followed these divisions, policy-makers have pursued stabilization goals with little concern for growth consequences, while trying to increase growth through structural reforms focused on improving economic efficiency. Moreover, structural policies, such as capital market liberalization, have had major consequences for economic stability. This book challenges these divisions by arguing that stabilization policy has important consequences for long-term growth and has often been implemented with adverse consequences. The first part of the book introduces the key questions and looks at the objectives of economic policy from different perspectives. The second part examines the central issues of macroeconomics, presenting an analysis of economic models and policy perspectives on stabilization from conservative, Keynesian, and heterodox perspectives. The third part presents a similar analysis for capital market liberalization (CML).Less
This book discusses the current debates on macroeconomics, capital market liberalization, and development, and develops a new framework within which one can assess alternative policies. The authors share the belief that the Washington consensus has advocated for narrow goals for development (with a focus on price stability), prescribed too few policy instruments (emphasizing monetary and fiscal policies), and places unwarranted faith in the role of markets. The new framework focuses on real stability and long-term sustainable and equitable growth, offers a variety of non-standard ways to stabilize the economy and promote growth, and accepts that market imperfections necessitate government interventions. Economists have traditionally divided their field into macroeconomics and microeconomics, with macroeconomics further divided into stabilization policy and growth. Since most policy discussions and much of the assignment of institutional responsibilities have followed these divisions, policy-makers have pursued stabilization goals with little concern for growth consequences, while trying to increase growth through structural reforms focused on improving economic efficiency. Moreover, structural policies, such as capital market liberalization, have had major consequences for economic stability. This book challenges these divisions by arguing that stabilization policy has important consequences for long-term growth and has often been implemented with adverse consequences. The first part of the book introduces the key questions and looks at the objectives of economic policy from different perspectives. The second part examines the central issues of macroeconomics, presenting an analysis of economic models and policy perspectives on stabilization from conservative, Keynesian, and heterodox perspectives. The third part presents a similar analysis for capital market liberalization (CML).
Alasdair Roberts
- Published in print:
- 2010
- Published Online:
- May 2010
- ISBN:
- 9780195374988
- eISBN:
- 9780199776849
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195374988.003.0003
- Subject:
- Political Science, American Politics
This chapter examines institutional reform efforts aimed at curbing the unhealthy tendencies of unconstrained democratic processes in the era of liberalization. In many countries, power was ...
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This chapter examines institutional reform efforts aimed at curbing the unhealthy tendencies of unconstrained democratic processes in the era of liberalization. In many countries, power was consolidated in the hands of finance ministries, with the expectation that they would control the spending impulses of legislators and other agencies. Many countries also adopted legal rules that were intended to limit spending and borrowing. This was the logic of discipline at work: skepticism about the capacity of democratic institutions to regulate themselves, combined with the naïve institutionalist's optimism that institutional reforms would produce significant changes in the behavior of governmental systems. These attempts at discipline largely failed. The authority of finance ministries could be asserted during crises but faltered afterward, largely because it proved so profoundly hostile to the principle of democratic control. And legal constraints on spending and borrowing proved to be unequal to the impulses they sought to contain. This was evident even before the onset of the global financial crisis in August 2007. The crisis itself did even more damage to the idea of budgetary discipline, as Treasuries themselves became the most activist of spending ministries.Less
This chapter examines institutional reform efforts aimed at curbing the unhealthy tendencies of unconstrained democratic processes in the era of liberalization. In many countries, power was consolidated in the hands of finance ministries, with the expectation that they would control the spending impulses of legislators and other agencies. Many countries also adopted legal rules that were intended to limit spending and borrowing. This was the logic of discipline at work: skepticism about the capacity of democratic institutions to regulate themselves, combined with the naïve institutionalist's optimism that institutional reforms would produce significant changes in the behavior of governmental systems. These attempts at discipline largely failed. The authority of finance ministries could be asserted during crises but faltered afterward, largely because it proved so profoundly hostile to the principle of democratic control. And legal constraints on spending and borrowing proved to be unequal to the impulses they sought to contain. This was evident even before the onset of the global financial crisis in August 2007. The crisis itself did even more damage to the idea of budgetary discipline, as Treasuries themselves became the most activist of spending ministries.
Peter Flaschel and Alfred Greiner
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199751587
- eISBN:
- 9780199932825
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199751587.001.0001
- Subject:
- Economics and Finance, Economic Systems
This book on Flexicurity Capitalism provides four rigorously formulated approaches to an analysis of the current and future evolution of capitalism from a Marx-Keynes and Kalecki- Schumpeter (MKS) ...
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This book on Flexicurity Capitalism provides four rigorously formulated approaches to an analysis of the current and future evolution of capitalism from a Marx-Keynes and Kalecki- Schumpeter (MKS) perspective. It does so in self-contained ways, focusing on macrodynamical models of the working of modern capitalist societies in the tradition of Classical and Keynesian authors, augmented by a modern reformulation of Schumpeterian ’Competitive Socialism’, the flexi(bility-se)curity approach currently intensively debated in the EU area. On this basis the book provides a novel approach to the study of the future of capitalism, a topic that has never been more important than now -- since the prosperity phase after World War II. It supplies an alternative to those discussions of current forms of capitalism which focus on the status quo of such economies, instead of providing an ideal scenario first, on the basis of which compromises between the status quo and the 'ideal' can be discussed. The employed modelling approaches, of an advanced type, are aimed at the post-graduate level of economic teaching. The chapters of the book can be utilised independently of each other but, nevertheless, provide a unique approach to macrodynamic theorizing that is firmly rooted in the MKS tradition of the understanding of the growth dynamics of capitalist economies.Less
This book on Flexicurity Capitalism provides four rigorously formulated approaches to an analysis of the current and future evolution of capitalism from a Marx-Keynes and Kalecki- Schumpeter (MKS) perspective. It does so in self-contained ways, focusing on macrodynamical models of the working of modern capitalist societies in the tradition of Classical and Keynesian authors, augmented by a modern reformulation of Schumpeterian ’Competitive Socialism’, the flexi(bility-se)curity approach currently intensively debated in the EU area. On this basis the book provides a novel approach to the study of the future of capitalism, a topic that has never been more important than now -- since the prosperity phase after World War II. It supplies an alternative to those discussions of current forms of capitalism which focus on the status quo of such economies, instead of providing an ideal scenario first, on the basis of which compromises between the status quo and the 'ideal' can be discussed. The employed modelling approaches, of an advanced type, are aimed at the post-graduate level of economic teaching. The chapters of the book can be utilised independently of each other but, nevertheless, provide a unique approach to macrodynamic theorizing that is firmly rooted in the MKS tradition of the understanding of the growth dynamics of capitalist economies.
Richard M. Goodwin
- Published in print:
- 1990
- Published Online:
- November 2003
- ISBN:
- 9780198283355
- eISBN:
- 9780191596315
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198283350.003.0008
- Subject:
- Economics and Finance, Macro- and Monetary Economics
The control variable in the previous chapter is interpreted here as public net income‐generating expenditure. In the absence of compensatory policy, the model of the previous chapter results in a ...
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The control variable in the previous chapter is interpreted here as public net income‐generating expenditure. In the absence of compensatory policy, the model of the previous chapter results in a highly irregular time series and maximum unemployment of 12%. In contrast, almost perfect smoothing is possible by large and rapid intervention, based upon derivative control, at the early stages of the fluctuation. The addition of proportional control can ensure that equilibrium unemployment falls gradually to an appropriately low level. Problems of implementation are discussed.Less
The control variable in the previous chapter is interpreted here as public net income‐generating expenditure. In the absence of compensatory policy, the model of the previous chapter results in a highly irregular time series and maximum unemployment of 12%. In contrast, almost perfect smoothing is possible by large and rapid intervention, based upon derivative control, at the early stages of the fluctuation. The addition of proportional control can ensure that equilibrium unemployment falls gradually to an appropriately low level. Problems of implementation are discussed.
Philippe Aghion and Enisse Kharroubi
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155234
- eISBN:
- 9781400846450
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155234.003.0012
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines the effect of the cyclical pattern of fiscal and monetary policies on economic growth. Economists generally see no connection between the way stabilization policies are ...
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This chapter examines the effect of the cyclical pattern of fiscal and monetary policies on economic growth. Economists generally see no connection between the way stabilization policies are implemented and the average speed at which the affected economy grows. If anything, growth theories tend to highlight the importance of stable and consistent policies as exemplified by recommendations to run prudent fiscal and monetary policies through balanced fiscal accounts or moderate inflation. Yet the view that policy recommendations to foster long-term growth should stop at calls for prudent fiscal and monetary policies has recently been challenged. Drawing on cross-industry, cross-country panel data regressions, this chapter explores the effect of fiscal policy countercyclicality and monetary policy countercyclicality. It shows that industries with greater financial constraints tend to grow faster in countries with more stabilizing fiscal or monetary policies.Less
This chapter examines the effect of the cyclical pattern of fiscal and monetary policies on economic growth. Economists generally see no connection between the way stabilization policies are implemented and the average speed at which the affected economy grows. If anything, growth theories tend to highlight the importance of stable and consistent policies as exemplified by recommendations to run prudent fiscal and monetary policies through balanced fiscal accounts or moderate inflation. Yet the view that policy recommendations to foster long-term growth should stop at calls for prudent fiscal and monetary policies has recently been challenged. Drawing on cross-industry, cross-country panel data regressions, this chapter explores the effect of fiscal policy countercyclicality and monetary policy countercyclicality. It shows that industries with greater financial constraints tend to grow faster in countries with more stabilizing fiscal or monetary policies.
Vijay Joshi and I. M. D Little
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198290780
- eISBN:
- 9780191596506
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198290780.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This book is a follow‐up study to an earlier work tracing India's economy up to 1991. Here the focus is on the economic reforms introduced after the financial crisis of 1991. The authors examine the ...
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This book is a follow‐up study to an earlier work tracing India's economy up to 1991. Here the focus is on the economic reforms introduced after the financial crisis of 1991. The authors examine the different areas of the economy and outline the successes and effects of reform measures. They utilize economic theory and knowledge to suggest ways to liberalize the economy and open up the market to revitalize the Indian economy alongside those reforms already implemented. They end with predictions of the future of economic reforms and what sectors should be seen as priorities for prospective development.Less
This book is a follow‐up study to an earlier work tracing India's economy up to 1991. Here the focus is on the economic reforms introduced after the financial crisis of 1991. The authors examine the different areas of the economy and outline the successes and effects of reform measures. They utilize economic theory and knowledge to suggest ways to liberalize the economy and open up the market to revitalize the Indian economy alongside those reforms already implemented. They end with predictions of the future of economic reforms and what sectors should be seen as priorities for prospective development.
Maurice Wright
- Published in print:
- 2002
- Published Online:
- October 2011
- ISBN:
- 9780199250530
- eISBN:
- 9780191697937
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199250530.003.0013
- Subject:
- Political Science, Political Economy
The Ministry of Finance reacted to the emergence of the fiscal crisis in 1975 by prescribing three related policy aims: to devise and implement a strategy to change the structure of Japan's tax ...
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The Ministry of Finance reacted to the emergence of the fiscal crisis in 1975 by prescribing three related policy aims: to devise and implement a strategy to change the structure of Japan's tax system so as to provide a more stable and productive source of revenue; to constrain the growth of public spending; and to reduce and, if possible, eliminate the fiscal deficit, and with it the rising costs of government debt. Over the following twenty-five years, those aims were translated into specific short and medium-term policy objectives, refined and adjusted contingently to accord with conjunctural changes in the economy and the polity. This chapter explains the origins and evolution of those objectives, and describes the formulation of policies, and the process of ‘policy succession’, to achieve them. The fiscal reconstruction of 1976–87, fiscal consolidation of 1987–91, fiscal reform in 1996–98, and fiscal explosion in 1998–2000 are discussed.Less
The Ministry of Finance reacted to the emergence of the fiscal crisis in 1975 by prescribing three related policy aims: to devise and implement a strategy to change the structure of Japan's tax system so as to provide a more stable and productive source of revenue; to constrain the growth of public spending; and to reduce and, if possible, eliminate the fiscal deficit, and with it the rising costs of government debt. Over the following twenty-five years, those aims were translated into specific short and medium-term policy objectives, refined and adjusted contingently to accord with conjunctural changes in the economy and the polity. This chapter explains the origins and evolution of those objectives, and describes the formulation of policies, and the process of ‘policy succession’, to achieve them. The fiscal reconstruction of 1976–87, fiscal consolidation of 1987–91, fiscal reform in 1996–98, and fiscal explosion in 1998–2000 are discussed.
Young‐Iob Chung
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195178302
- eISBN:
- 9780199783557
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195178300.003.0006
- Subject:
- Economics and Finance, South and East Asia
This chapter investigates how the colonial government promoted capital formation through fiscal and financial policies, by providing financial incentives and creating a favorable economic environment ...
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This chapter investigates how the colonial government promoted capital formation through fiscal and financial policies, by providing financial incentives and creating a favorable economic environment to invest in newly-produced capital assets. The fiscal policies examined are the taxation and subsidy measures that enhanced business opportunities for profit, especially in the targeted industries. The financial policies examined are those that established various financial institutions to mobilize savings — both from domestic and foreign sources — and allocate loans with subsidized interest for investment in the targeted industries through public financial institutions. The means through which savings were mobilized are examined, including deposits in financial institutions, which were loaned out for investment; Japanese government grants, foreign borrowings, and “forced savings” through currency issues to supplement inadequate owners equity. Since the government's excessive intervention through preferential schemes, such as directed credits, subsidies, and tax exemptions carried a considerable economic burden, its negative impact is also evaluated.Less
This chapter investigates how the colonial government promoted capital formation through fiscal and financial policies, by providing financial incentives and creating a favorable economic environment to invest in newly-produced capital assets. The fiscal policies examined are the taxation and subsidy measures that enhanced business opportunities for profit, especially in the targeted industries. The financial policies examined are those that established various financial institutions to mobilize savings — both from domestic and foreign sources — and allocate loans with subsidized interest for investment in the targeted industries through public financial institutions. The means through which savings were mobilized are examined, including deposits in financial institutions, which were loaned out for investment; Japanese government grants, foreign borrowings, and “forced savings” through currency issues to supplement inadequate owners equity. Since the government's excessive intervention through preferential schemes, such as directed credits, subsidies, and tax exemptions carried a considerable economic burden, its negative impact is also evaluated.
Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.003.0004
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Though macroeconomics was developed for developed countries, developing countries often use this corpus of knowledge — with its competing schools of thought — without any significant modification. It ...
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Though macroeconomics was developed for developed countries, developing countries often use this corpus of knowledge — with its competing schools of thought — without any significant modification. It is by no means clear that applying these theories to developing countries is either justified or appropriate. This chapter examines the differences in macroeconomic policy between developing and developed countries. The basic macroeconomic aggregates: output, employment, and inflation are, of course, the same for both developed and developing economies. So too are the basic identities and equilibrium conditions: savings must still equal investment, output must equal income, and aggregate demand is the sum of consumption, investment, government expenditures, and net exports. However, systematic differences between the economies of developed and developing countries and between developing countries themselves, such as the relative effectiveness of macroeconomic tools, give rise to large variation in economic outcomes and policy choices.Less
Though macroeconomics was developed for developed countries, developing countries often use this corpus of knowledge — with its competing schools of thought — without any significant modification. It is by no means clear that applying these theories to developing countries is either justified or appropriate. This chapter examines the differences in macroeconomic policy between developing and developed countries. The basic macroeconomic aggregates: output, employment, and inflation are, of course, the same for both developed and developing economies. So too are the basic identities and equilibrium conditions: savings must still equal investment, output must equal income, and aggregate demand is the sum of consumption, investment, government expenditures, and net exports. However, systematic differences between the economies of developed and developing countries and between developing countries themselves, such as the relative effectiveness of macroeconomic tools, give rise to large variation in economic outcomes and policy choices.
David McKay
- Published in print:
- 1999
- Published Online:
- October 2011
- ISBN:
- 9780198296775
- eISBN:
- 9780191685279
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198296775.001.0001
- Subject:
- Political Science, European Union
This book examines the decision to adopt European Monetary Union (EMU) as a federal bargain by the European Union, designed to provide the countries of Europe with a bulwark against the volatility of ...
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This book examines the decision to adopt European Monetary Union (EMU) as a federal bargain by the European Union, designed to provide the countries of Europe with a bulwark against the volatility of the international economy. Although the precise motives of the participants varied from country to country, all were agreed that only federal-like political and economic arrangements would provide a guarantee of economic and political stability. The book provides a coherent theoretical framework for understanding the decisions taken at Maastricht and later. By making comparisons with other federations, the book also examines the political and economic conditions under which federations succeed or fail. It concludes that EMU will only be politically sustainable if novel ways are found to limit centrally imposed fiscal and spending policies.Less
This book examines the decision to adopt European Monetary Union (EMU) as a federal bargain by the European Union, designed to provide the countries of Europe with a bulwark against the volatility of the international economy. Although the precise motives of the participants varied from country to country, all were agreed that only federal-like political and economic arrangements would provide a guarantee of economic and political stability. The book provides a coherent theoretical framework for understanding the decisions taken at Maastricht and later. By making comparisons with other federations, the book also examines the political and economic conditions under which federations succeed or fail. It concludes that EMU will only be politically sustainable if novel ways are found to limit centrally imposed fiscal and spending policies.
Julian E. Zelizer
- Published in print:
- 2012
- Published Online:
- October 2017
- ISBN:
- 9780691150734
- eISBN:
- 9781400841899
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691150734.003.0008
- Subject:
- History, American History: early to 18th Century
This chapter examines fiscal conservatism under the Roosevelt administration. Fiscal conservatism has been linked to liberalism since the construction of the New Deal state. Indeed, a pragmatic ...
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This chapter examines fiscal conservatism under the Roosevelt administration. Fiscal conservatism has been linked to liberalism since the construction of the New Deal state. Indeed, a pragmatic alliance between liberals and moderate fiscal conservatives has played a key role in some of the most durable state-building efforts in U.S. history. This alliance produced bold federal initiatives in a nation historically resistant to centralized government. Building on the work of James Savage and David Kennedy, this chapter argues that fiscal conservatism constituted a key component of the New Deal during the years 1933–1938. It looks at two members of the administration who maintained pressure on Franklin Roosevelt to balance budgets: Lewis Douglas, who served as Director of Budget from 1933 to 1934, and Henry Morgenthau Jr., secretary of the treasury from 1934 to 1945. The chapter concludes with an assessment of Roosevelt's fiscal policy in relation to Keynesianism.Less
This chapter examines fiscal conservatism under the Roosevelt administration. Fiscal conservatism has been linked to liberalism since the construction of the New Deal state. Indeed, a pragmatic alliance between liberals and moderate fiscal conservatives has played a key role in some of the most durable state-building efforts in U.S. history. This alliance produced bold federal initiatives in a nation historically resistant to centralized government. Building on the work of James Savage and David Kennedy, this chapter argues that fiscal conservatism constituted a key component of the New Deal during the years 1933–1938. It looks at two members of the administration who maintained pressure on Franklin Roosevelt to balance budgets: Lewis Douglas, who served as Director of Budget from 1933 to 1934, and Henry Morgenthau Jr., secretary of the treasury from 1934 to 1945. The chapter concludes with an assessment of Roosevelt's fiscal policy in relation to Keynesianism.
Brigitte Granville
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691145402
- eISBN:
- 9781400846443
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691145402.003.0002
- Subject:
- Business and Management, Finance, Accounting, and Banking
This chapter begins with a review of historical examples that shaped the thinking of economists about the importance for effective monetary policy of understanding the link between inflation and ...
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This chapter begins with a review of historical examples that shaped the thinking of economists about the importance for effective monetary policy of understanding the link between inflation and public debt. The threat to monetary policy from high levels of government indebtedness stems from the temptation to use monetary policy to erode or eliminate public debt. The chapter examines this area of thinking with particular reference to the episode of very high inflation in Russia in the 1990s, since that episode clearly demonstrates the links between fiscal and financial conditions and monetary factors in bringing about high inflation. It concludes by considering the question of whether the Sargent and Wallace analysis is well validated by the experience of mature economies.Less
This chapter begins with a review of historical examples that shaped the thinking of economists about the importance for effective monetary policy of understanding the link between inflation and public debt. The threat to monetary policy from high levels of government indebtedness stems from the temptation to use monetary policy to erode or eliminate public debt. The chapter examines this area of thinking with particular reference to the episode of very high inflation in Russia in the 1990s, since that episode clearly demonstrates the links between fiscal and financial conditions and monetary factors in bringing about high inflation. It concludes by considering the question of whether the Sargent and Wallace analysis is well validated by the experience of mature economies.
Joël Félix
- Published in print:
- 2013
- Published Online:
- January 2014
- ISBN:
- 9780197265383
- eISBN:
- 9780191760433
- Item type:
- chapter
- Publisher:
- British Academy
- DOI:
- 10.5871/bacad/9780197265383.003.0006
- Subject:
- History, European Early Modern History
Despite its iconic status, Necker's Compte-rendu au roi is one of the most debated but least understood historical documents of the Ancien Regime. This chapter challenges the assumption that the ...
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Despite its iconic status, Necker's Compte-rendu au roi is one of the most debated but least understood historical documents of the Ancien Regime. This chapter challenges the assumption that the Compte-rendu was the first of its kind to be published and shows how it fitted within an established administrative tradition. It also rejects the classic interpretation according to which publication of the Compte-rendu was part of Necker's attempt at deceiving the public and justifying his popular but unsustainable policy of funding the American war without taxes. It is shown that the Compte-rendu's main objective, which drew heavily on the British fiscal system described by Necker as best practice, was to justify the necessity of additional fiscal resources — and fiscal transparency — for raising new loans to pay for the war. Rejection by Louis XVI of tax increase for fear of parlementaire opposition partly explains Necker's resignation.Less
Despite its iconic status, Necker's Compte-rendu au roi is one of the most debated but least understood historical documents of the Ancien Regime. This chapter challenges the assumption that the Compte-rendu was the first of its kind to be published and shows how it fitted within an established administrative tradition. It also rejects the classic interpretation according to which publication of the Compte-rendu was part of Necker's attempt at deceiving the public and justifying his popular but unsustainable policy of funding the American war without taxes. It is shown that the Compte-rendu's main objective, which drew heavily on the British fiscal system described by Necker as best practice, was to justify the necessity of additional fiscal resources — and fiscal transparency — for raising new loans to pay for the war. Rejection by Louis XVI of tax increase for fear of parlementaire opposition partly explains Necker's resignation.
Neil Wallace
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691158709
- eISBN:
- 9781400847648
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691158709.003.0005
- Subject:
- Economics and Finance, Economic History
This chapter is a variation on the theme that monetary and fiscal policies are interrelated and must necessarily be coordinated. The issue of coordination arises when one wants to know whether it is ...
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This chapter is a variation on the theme that monetary and fiscal policies are interrelated and must necessarily be coordinated. The issue of coordination arises when one wants to know whether it is possible for monetary policy permanently to influence an economy's inflation rate. One can imagine a monetary authority sufficiently powerful vis-à-vis the fiscal authority that by the imposition of slower rates of growth of base money, both now and into the indefinite future, it can successfully constrain fiscal policy by telling the fiscal authority how much seigniorage it can expect now and in the future. In this setting, monetary and fiscal policies are coordinated by having the monetary authority discipline the fiscal authority. The chapter first describes a simple model that embodies unadulterated monetarism before discussing the Cagan-Bresciani-Turroni effect.Less
This chapter is a variation on the theme that monetary and fiscal policies are interrelated and must necessarily be coordinated. The issue of coordination arises when one wants to know whether it is possible for monetary policy permanently to influence an economy's inflation rate. One can imagine a monetary authority sufficiently powerful vis-à-vis the fiscal authority that by the imposition of slower rates of growth of base money, both now and into the indefinite future, it can successfully constrain fiscal policy by telling the fiscal authority how much seigniorage it can expect now and in the future. In this setting, monetary and fiscal policies are coordinated by having the monetary authority discipline the fiscal authority. The chapter first describes a simple model that embodies unadulterated monetarism before discussing the Cagan-Bresciani-Turroni effect.
Thomas J. Sargent
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691158709
- eISBN:
- 9781400847648
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691158709.003.0010
- Subject:
- Economics and Finance, Economic History
This chapter shows that predicaments facing the European Union today are reminiscent of constitutional decisions the United States faced not once, but twice. It begins with a simple expected present ...
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This chapter shows that predicaments facing the European Union today are reminiscent of constitutional decisions the United States faced not once, but twice. It begins with a simple expected present value model for government debt and explains how Hansen and Sargent (1980) used rational expectations econometrics to render this model operational. It then presents a case study that illustrates how the constitutions of the United States have influenced the government net-of-interest surplus process and therefore the value of government debt. Drawing on the unpleasant arithmetic of Sargent and Wallace (1981), the chapter argues that a responsible fiscal policy makes it easy for a monetary authority to sustain low inflation, whereas a profligate fiscal policy has the opposite effect.Less
This chapter shows that predicaments facing the European Union today are reminiscent of constitutional decisions the United States faced not once, but twice. It begins with a simple expected present value model for government debt and explains how Hansen and Sargent (1980) used rational expectations econometrics to render this model operational. It then presents a case study that illustrates how the constitutions of the United States have influenced the government net-of-interest surplus process and therefore the value of government debt. Drawing on the unpleasant arithmetic of Sargent and Wallace (1981), the chapter argues that a responsible fiscal policy makes it easy for a monetary authority to sustain low inflation, whereas a profligate fiscal policy has the opposite effect.
J. C. R. Dow and I. D. Saville
- Published in print:
- 1990
- Published Online:
- November 2003
- ISBN:
- 9780198283195
- eISBN:
- 9780191596186
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198283199.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This book has been written to work on two levels. On the one hand, it provides a theory of monetary policy, focusing on the role of the central bank in determining and effecting policy. It also ...
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This book has been written to work on two levels. On the one hand, it provides a theory of monetary policy, focusing on the role of the central bank in determining and effecting policy. It also examines the relationship of the central banks to the public and private sectors. Both authors have extensive experience working in the Bank of England, and so are attempting to transfer this experience to the area of economic theory. The theoretical analysis is complemented by an examination of the successes and failures of monetary policy in the UK from the mid‐1960s. As such, the book acts as an important work for students of economics and economic theory, but is also accessible to those involved in policy‐making, journalism, and other interested parties.Less
This book has been written to work on two levels. On the one hand, it provides a theory of monetary policy, focusing on the role of the central bank in determining and effecting policy. It also examines the relationship of the central banks to the public and private sectors. Both authors have extensive experience working in the Bank of England, and so are attempting to transfer this experience to the area of economic theory. The theoretical analysis is complemented by an examination of the successes and failures of monetary policy in the UK from the mid‐1960s. As such, the book acts as an important work for students of economics and economic theory, but is also accessible to those involved in policy‐making, journalism, and other interested parties.
Vijay Joshi and I. M. D. Little
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198290780
- eISBN:
- 9780191596506
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198290780.003.0002
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Deals with the process of stabilization after the economic crisis suffered by India in 1991. It presents a mixture of evidence and theory to examine the success of various stabilization methods ...
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Deals with the process of stabilization after the economic crisis suffered by India in 1991. It presents a mixture of evidence and theory to examine the success of various stabilization methods attempted. It shows how stabilization was achieved for the medium term through successful reorientation of the balance of payments. This was a success, but inflation remains higher than would be ideal and has yet to be properly managed. For long‐term stabilization, public‐sector debt must be cut to help boost private‐sector investment.Less
Deals with the process of stabilization after the economic crisis suffered by India in 1991. It presents a mixture of evidence and theory to examine the success of various stabilization methods attempted. It shows how stabilization was achieved for the medium term through successful reorientation of the balance of payments. This was a success, but inflation remains higher than would be ideal and has yet to be properly managed. For long‐term stabilization, public‐sector debt must be cut to help boost private‐sector investment.
Tania Ajam and Janine Aron
- Published in print:
- 2009
- Published Online:
- May 2009
- ISBN:
- 9780199551460
- eISBN:
- 9780191720376
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199551460.003.0004
- Subject:
- Economics and Finance, Public and Welfare, Economic Systems
This chapter reviews the policies and outcomes of South Africa's fiscal reform since 1994, and explores the main challenges it has raised. Section 2 discusses the improved governance of fiscal policy ...
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This chapter reviews the policies and outcomes of South Africa's fiscal reform since 1994, and explores the main challenges it has raised. Section 2 discusses the improved governance of fiscal policy with its base in constitutional provisions. Section 3 summarizes the key fiscal reforms since 1994. Section 4 examines the performance of national fiscal policy by means of the trends of the main budget indicators, measures of the cyclically adjusted fiscal stance, a comparison of budget projections and actual outcomes, the management and sustainability of debt, and, finally, the contribution of fiscal policy to South Africa's improved macroeconomic stability. Section 5 explores the implications of the vertical fiscal imbalance created by a combination of highly centralized revenue raising powers and increased decentralization of expenditure responsibility to sub-national governments. Section 6 concludes.Less
This chapter reviews the policies and outcomes of South Africa's fiscal reform since 1994, and explores the main challenges it has raised. Section 2 discusses the improved governance of fiscal policy with its base in constitutional provisions. Section 3 summarizes the key fiscal reforms since 1994. Section 4 examines the performance of national fiscal policy by means of the trends of the main budget indicators, measures of the cyclically adjusted fiscal stance, a comparison of budget projections and actual outcomes, the management and sustainability of debt, and, finally, the contribution of fiscal policy to South Africa's improved macroeconomic stability. Section 5 explores the implications of the vertical fiscal imbalance created by a combination of highly centralized revenue raising powers and increased decentralization of expenditure responsibility to sub-national governments. Section 6 concludes.
