Austerity versus stimulus: the polarizing effect of fiscal policy
Journal article
McManus, R. 2015. Austerity versus stimulus: the polarizing effect of fiscal policy. Oxford Economics Papers. https://doi.org/10.1093/oep/gpv023
Authors | McManus, R. |
---|---|
Abstract | Through constructing a New-Keynesian DSGE model with heterogeneous agents, this paper investigates both the aggregate and distributional consequences of fiscal policy. Polarized preferences over the conduct of fiscal policy emerge between those agents who participate in credit markets and those who do not. Exogenous shocks impact the two types of agent differently, and, as a result, fiscal policy responses to these shocks produce minimal aggregate welfare effects as the gains of one agent are matched by the losses of another. There is, therefore, a normative justication for countercyclical fiscal policy, but on redistributive rather than stabilisation grounds. |
Year | 2015 |
Journal | Oxford Economics Papers |
Publisher | Oxford University Press |
ISSN | 0030-7653 |
Digital Object Identifier (DOI) | https://doi.org/10.1093/oep/gpv023 |
Publication dates | |
30 Mar 2015 | |
Publication process dates | |
Deposited | 27 Apr 2015 |
Accepted | 05 Feb 2015 |
Output status | Published |
File |
https://repository.canterbury.ac.uk/item/87495/austerity-versus-stimulus-the-polarizing-effect-of-fiscal-policy
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