On Keynesian effects of (apparent) non-Keynesian fiscal policies

Canale, Rosaria Rita and Foresti, Pasquale and Marani, Ugo and Napolitano, Oreste (2007): On Keynesian effects of (apparent) non-Keynesian fiscal policies.

Abstract

The aim of this paper is to evaluate the robustness of the theory that claims restrictive effects of expansionary fiscal policy. It shows that such so-called “non-Keynesian effects” may arise from synchronous and opposite monetary policy interventions. The paper demonstrates this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions – in which Central Banks consider deficit spending as an element that generates inflation expectations. Econometric analysis also shows that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.

• Item Type: MPRA Paper
• Institution: Dipartimento di analisi dei processi socio-economici, produttivi e territoriali. Facoltà di Economia. Università di Napoli "Federico II"
• Language: English
• Keywords: Fiscal policy; Monetary policy; Central Banks Policy strategies
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

References

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