Economic Theory and Fiscal Policy

Fiscal Policy and Economic Growth in Kenya

The question of whether or not fiscal policy stimulates growth has dominated theoretical and empirical debate for a long time. One viewpoint believes that government involvement in economic activity is vital for growth, but an opposing view holds that government operations are inherently bureaucratic and inefficient and therefore stifles rather than promotes growth. In the empirical literature,...

Fiscal Policy, Economic Integration and Unemployment

In this paper fiscal policy is examined for an open economy characterised by unemployment due to efficiency wages. We allow for capital and firm mobility in a model where the government chooses the level of wage, source-based capital and profit taxation. The taxing choices of governments are analyzed in scenarios which differ with respect to the constraints imposed on the set of available taxes...

Generational conflict, fiscal policy, and economic growth

Worldwide, dependency ratios are forecast to increase dramatically in the next 50 years. A great deal of attention has been devoted to understanding the changes in fiscal policies that ‘‘must’’ take place to accommodate these changes and maintain desirable rates of economic growth. In contrast, less effort has been concentrated on studying the fiscal shifts that will endogenously result from de...

Monetary Policy, Fiscal Policy, and Aggregate Economic Activity in Korea

Activist Fiscal Policy to Stabilize Economic Activity

We review the evidence on the practice and effects of discretionary fiscal policy, particularly in the context of recent efforts to stimulate the economy, reaching two main conclusions. First, policy interventions have increased in this decade, pre-dating the 2009 stimulus. Second, despite a large economic literature on the topic, the state of theory and evidence is not as "shovel ready" as one...