Author: | Barry, F. Devereux, M. |
Title: | The "expansionary fiscal contraction" hypothesis: a neo-keynesian analysis |
Journal: | Oxford Economic Papers
1995 : APR, VOL. 47:2, p. 249-264 |
Index terms: | ECONOMICS INVESTMENT EMPLOYMENT |
Language: | eng |
Abstract: | It has recently been argued that several fiscal contractions can, through their impact on expectation, lead to growth in consumption, investment and employment. Since such contractions typically occur because adjustment has been delayed due to fear of aggravating unemployment, the authors examine the hypothesis in a model with wage/price rigidities. The New Classical features of the model, however, allow expectational effects to be taken fully into account. |
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