The bottom line is that fiscal stimulus
along the lines advocated by Keynes remains a viable policy tool in the event of a severe recession.
* Greg Kaplan, University of Pennsylvania and NBER, and Giovanni Violante, New York University and NBER, "A Model of the Consumption Response to Fiscal Stimulus
Payments" (NBER Working Paper No.
THE SOURCE: "The Effects of Fiscal Stimulus
: Evidence From the 2009 Cash for Clunkers Program" by Atif Mian and Amir Sufi, in The Quarterly Journal of Economics, Aug.
The five professors said capital investment is needed, arguing that "only through this form of fiscal stimulus
can the UK hope to create a virtuous cycle of jobs, growth and confidence".
The group warned that Labour's Plan B fiscal stimulus
package of tax cuts and state spending to boost growth and jobs would be "the worst response" Britain could make to the debt crisis in the eurozone.
The growth rate reflected a drop in bond sales by both governments reining in fiscal stimulus
programs and by monetary authorities curtailing issuance in the early part of the year.
At one point Congdon compares Paul Krugman unfavorably to Keynes, noting that Krugman seemed to give up on monetary policy during the recent recession, when he called for massive fiscal stimulus
. I see these two figures as being much more similar than Congdon does.
Despite the grim predictions, Prime Minister David Cameron insisted that there was no leeway for fiscal stimulus
through tax cuts or public spending increases, or monetary stimulus in the form of the Bank of England reducing interest rates or printing money.
As such, the countercyclical fiscal policies adopted by the country, coupled with the fiscal stimulus
plan provided towards infrastructure enabled Saudi Arabia to post real GDP growth of 0.6 per cent for 2009 despite a sharp drop in oil prices.
The federal government has opted to use US Treasuries in paying for huge fiscal stimulus
programs to stimulate the economy.
16479), co-authors Ethan Ilzetzki, Enrique Mendoza, and Carlos Vegh show that the impact of government fiscal stimulus
depends on key country characteristics, including the level of development, the exchange rate regime, openness to trade, and public indebtedness.
Japanese economic growth will slow to a real 1.5 percent in fiscal 2011 from 3.1 percent in the current year due mainly to weak private consumption amid the diminishing effects of fiscal stimulus
measures, government projections showed Wednesday.