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The Limits of Fiscal Policy

Authors: Makin, Anthony J.

  • Radically re-casts fiscal policy following the limited economic growth after the Global Financial Crisis
    Gathers together a wide variety of perspectives on possible alternatives to fiscal activism
    Considers how post GFC experience has parallels with the post-Depression experience with regard to investment uncertainty, and trade protectionism

Buy this book

eBook $54.99
price for USA in USD (gross)
  • ISBN 978-3-319-90158-9
  • Digitally watermarked, DRM-free
  • Included format: PDF, EPUB
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover $69.99
price for USA in USD
  • ISBN 978-3-319-90157-2
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
About this book

This book presents alternative macroeconomic perspectives, primarily open economy, on the limitations of discretionary fiscal policy, with a focus on government spending.  Following an overview on the post-crisis Keynesian revival and of the macro-foundations needed for subsequent analysis, different perspectives are expounded that highlight the failings of fiscal activism. These perspectives include extended loanable funds analysis, an expenditure-output related model incorporating money and exchange rates, and a dependent economy framework. The approaches are used to examine investment and net export crowding out effects and their implications for national income, and are then adapted to show the macroeconomic impact of different fiscal consolidation measures, revealing that the nature of fiscal repair is critical. A concluding chapter evaluates the nexus between budgetary policy and confidence, summarises the key failings of fiscal activism, and suggests fiscal policy goals. 
The book will appeal to university lecturers and researchers in macroeconomics and economists working in government and the private sector.

About the authors

Anthony J Makin is Professor of Economics at Griffith University, Australia, and has previously served with the International Monetary Fund and Australian departments of Finance, Foreign Affairs and Trade and The Treasury.  He has published widely and is a member of the National Economic Panel of the Economic Society of Australia.

Reviews

“Since the Keynesian Revolution, economists have divided themselves in two almost religious camps: the True Believers who, as a past president of the American Economic Association, stated in the 1960s, thought that Keynes had said the last word on how to deal with recessions, and the Atheists who, especially in the late 1970s and in the 1980s, concluded that Keynes’ teaching were wrong.
After the 2008 financial crises, the True Believers re-emerged and managed to influence the policies of many countries, defining as “stupid” policymakers who did not adopt Keynesian policies. In this lucidly-written and well- argued book, Professor Makin presents many theoretical reasons why policymakers would be advised to listen to the Atheists. This reviewer found most of those reasons highly convincing.” (Vito Tanzi, Former Director of the Fiscal Affairs Department of the IMF)

“Tony Makin's book does a great service to modern economics. Crude Keynesians focus on effects of spending increases or tax cuts.  Makin analyses the offsetting factors that exist in the real world of fiscal policy implementation. Government spending usually creates debt.  Debt, especially large amounts, limits spending as lenders require interest to be paid and its repayment.  Does increased government increase or decrease confidence of households and business?  Another example where standard crude Keynesian analysis breaks down.” (Peter Jonson, former Head of Research, Reserve Bank of Australia)

“The attempted revival of activist fiscal policy as a response to the financial crisis of 2008 was based in part on a failure to fully appreciate the role of monetary policy and the exchange rate. In an economy with an inflation targeting central bank and floating exchange rate, there is no reason to expect fiscal policy to be effective in stabilising aggregate demand.  Makin carefully elucidates the analytical foundations of this view of fiscal policy ineffectiveness in a way that is accessible to policymakers, as well as academics.” (Stephen Kirchner, Program Director, United States Studies Centre, University of Sydney)

Table of contents (9 chapters)

Table of contents (9 chapters)
  • The Keynesian Revival

    Pages 1-14

    Makin, Anthony J.

  • Macro-foundations for Fiscal Analysis

    Pages 15-29

    Makin, Anthony J.

  • Budget Deficits, Public Debt and Crowding Out

    Pages 31-44

    Makin, Anthony J.

  • Budget Deficits and National Income

    Pages 45-56

    Makin, Anthony J.

  • Fiscal Policy, Money and the Exchange Rate

    Pages 57-71

    Makin, Anthony J.

Buy this book

eBook $54.99
price for USA in USD (gross)
  • ISBN 978-3-319-90158-9
  • Digitally watermarked, DRM-free
  • Included format: PDF, EPUB
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover $69.99
price for USA in USD
  • ISBN 978-3-319-90157-2
  • Free shipping for individuals worldwide
  • Usually dispatched within 3 to 5 business days.
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Bibliographic Information

Bibliographic Information
Book Title
The Limits of Fiscal Policy
Authors
Copyright
2018
Publisher
Palgrave Pivot
Copyright Holder
The Editor(s) (if applicable) and The Author(s)
eBook ISBN
978-3-319-90158-9
DOI
10.1007/978-3-319-90158-9
Hardcover ISBN
978-3-319-90157-2
Edition Number
1
Number of Pages
XIII, 121
Number of Illustrations
34 b/w illustrations
Topics