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
AuthorsMcManus, 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.

Year2015
JournalOxford Economics Papers
PublisherOxford University Press
ISSN0030-7653
Digital Object Identifier (DOI)https://doi.org/10.1093/oep/gpv023
Publication dates
Print30 Mar 2015
Publication process dates
Deposited27 Apr 2015
Accepted05 Feb 2015
Output statusPublished
File
Permalink -

https://repository.canterbury.ac.uk/item/87495/austerity-versus-stimulus-the-polarizing-effect-of-fiscal-policy

Download files

  • 26
    total views
  • 68
    total downloads
  • 0
    views this month
  • 3
    downloads this month

Export as

Related outputs

Managing public debt in the UK
McManus, R., Ozkan, G. and Trzeciakiewicz, D. 2022. Managing public debt in the UK. CESifo Forum. 2022 (1).
Measuring research excellence amongst economics lecturers in the UK
McManus, Richard, Mumford, K. and Sechel, Cristina 2021. Measuring research excellence amongst economics lecturers in the UK. Bulletin of Economic Research. 74 (2), pp. 386-404. https://doi.org/10.1111/boer.12299
Fiscal space and the procyclicality of fiscal policy: the case for making hay while the sun shines
Ahmad, Asif, McManus, Richard and Ozkan, F. Gulcin 2021. Fiscal space and the procyclicality of fiscal policy: the case for making hay while the sun shines. Economic Inquiry. 59 (4), pp. 1687-1701. https://doi.org/10.1111/ecin.13008
Improving drinking water quality in S. Korea: A choice experiment with hypothetical bias treatments
McManus, R., Gschwandtner, A. and Jang, C. 2020. Improving drinking water quality in S. Korea: A choice experiment with hypothetical bias treatments. Water. 12, pp. 1-31. https://doi.org/10.3390/w12092569
SROI in the art gallery: valuing social impact
Jackson, A. and McManus, R. 2019. SROI in the art gallery: valuing social impact. Cultural Trends. 28 (2). https://doi.org/10.1080/09548963.2019.1617937
Tourism boycotts and animosity: a study of seven events
Yu, Q., McManus, R., Yen, D. and Liu, X. 2019. Tourism boycotts and animosity: a study of seven events. Annals of Tourism Research. https://doi.org/10.1016/j.annals.2019.102792
Why are fiscal multipliers asymmetric? The role of credit constraints
McManus, R., Ozkan, G. and Trzeciakiewicz, D. 2019. Why are fiscal multipliers asymmetric? The role of credit constraints. Economica. 88 (349), pp. 32-69. https://doi.org/10.1111/ecca.12340
Fiscal trade-offs: the relationship between output and debt in policy interventions
McManus, R. 2018. Fiscal trade-offs: the relationship between output and debt in policy interventions. The Manchester School. 86 (S1). https://doi.org/10.1111/manc.12241
Who does better for the economy? Presidents versus parliamentary democracies
McManus, R. and Ozkan, G. 2018. Who does better for the economy? Presidents versus parliamentary democracies. Public Choice. 176 (3-4), pp. 361-387.
Expansionary contractions and fiscal free lunches: too good to be true?
McManus, R., Ozkan, F. and Trzeciakiewicz, D. 2017. Expansionary contractions and fiscal free lunches: too good to be true? The Scandinavian Journal Of Economics. https://doi.org/10.1111/sjoe.12269
The broken decade: prosperity, depression and recovery in New Zealand, 1928-39 by Malcolm McKinnon (Otago University Press, Dunedin)
McManus, R. 2017. The broken decade: prosperity, depression and recovery in New Zealand, 1928-39 by Malcolm McKinnon (Otago University Press, Dunedin). The Economic Record. 93 (302), pp. 504-505. https://doi.org/10.1111/1475-4932.12361
A methodology to understand student choice of Higher Education Institutions: the case of the United Kingdom
McManus, R., Haddock-Fraser, J. and Rands, P. 2017. A methodology to understand student choice of Higher Education Institutions: the case of the United Kingdom. Journal of Higher Education Policy and Management. https://doi.org/10.1080/1360080X.2017.1330806
Assessment timing: student preferences and its impact on performance
McManus, R. 2016. Assessment timing: student preferences and its impact on performance. Practitioner Research in Higher Education Journal - Assessment Special Edition. 10 (1), pp. 203-216.
UK pension sustainability and fund manager governance: agent duties to the principal
Shevchenko, K., McManus, R. and Haddock-Fraser, J. 2015. UK pension sustainability and fund manager governance: agent duties to the principal. Journal of Sustainable Finance and Investment. 54 (4), pp. 205-209. https://doi.org/10.1080/20430795.2015.1106209
On the consequences of procyclical fiscal policy
McManus, R. and Ozkan, G. 2015. On the consequences of procyclical fiscal policy. Fiscal Studies. 36 (1), pp. 29-50. https://doi.org/10.1111/j.1475-5890.2015.12044.x