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Garrison's Capital-Based Macroeconomics: The Role of Deficit, Credit Control and Taxation

Ferlito, Carmelo (2011): Garrison's Capital-Based Macroeconomics: The Role of Deficit, Credit Control and Taxation. Published in: Public Finance: Lessons from the Past and Effects on the Future (2012): pp. 105-122.

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Abstract

It could be quite simple to quite simple to argue that, in the realm of the Austrian School of Economics, public finance plays no role. However, the Austrian perspective is very wide and, starting from Hayek, it is possible to trace a path that arrives to Roger Garrison. Garrison’s capital-based macroeconomics is the attempt to write a new general macroeconomics founded on time, expectations and capital. Starting from that basic graphic tool called Hayek’s triangle, Garrison tries to verify which instruments, in the field of political economy, are consistent with a sustainable growth. He considers the following cases: deficit finance, deficit spending (inert government projects, nationalized industries, infrastructures) and tax reform, recognizing a role to fiscal policy, but stressing the preference for a general institutional change.

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