Gechert, Sebastian (2012): The multiplier principle, credit-money and time.
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We analyze the simple fiscal multiplier and extend it in terms of a credit-money framework and in terms of a time dimension, making it applicable to time series data. In order to take care of a credit-money framework, we complement the sources and uses of funds that are available along the multiplier process. In order to tackle the issue of time, we introduce a time component, which captures the time duration of a multiplier round. We argue that both attempts are incomplete on their own, but together they form a new version of the multiplier depending on the time duration of a multiplier period and a leakage that comprises net debt settlement and net accumulation of receivables. While the comparative-static stability condition of the multiplier can be dropped in this framework, our integrated multiplier reveals a dynamic stability condition for the multiplier process. Moreover, the integrated multiplier can be applied to evaluate income effects of transitory stimulus packages for a given time span. Multiplier effects are not calculated via identification of public spending shocks and GDP effects, but via determination of the behavioral parameters.
|Item Type:||MPRA Paper|
|Original Title:||The multiplier principle, credit-money and time|
|Keywords:||fiscal multiplier; credit-money; dynamic stability; stockflow relation|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E12 - Keynes ; Keynesian ; Post-Keynesian
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General
|Depositing User:||Sebastian Gechert|
|Date Deposited:||14. Jan 2012 02:44|
|Last Modified:||09. Oct 2015 06:24|
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