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The Case for an Active Fiscal Policy in the Developed World

The Case for an Active Fiscal Policy in the Developed World Abstract In this world of zero interest rates, fiscal policy has to contribute to support aggregate demand. A well-designed expansionary fiscal policy can contribute to better economic outcomes in three ways. First, it could boost potential growth by investing in activities that raise productivity. Second, it could help monetary policy become more effective by increasing the supply of government bonds and raising the equilibrium real interest rate. Third, it would help reduce income inequality. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business Economics Springer Journals

The Case for an Active Fiscal Policy in the Developed World

Ubide, Angel
Business Economics , Volume 51 (3): 3 – Jul 1, 2016
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References (15)

Publisher
Springer Journals
Copyright
2016 National Association for Business Economics
ISSN
0007-666X
eISSN
1554-432X
DOI
10.1057/s11369-016-0006-0
Publisher site
See Article on Publisher Site

Abstract

Abstract In this world of zero interest rates, fiscal policy has to contribute to support aggregate demand. A well-designed expansionary fiscal policy can contribute to better economic outcomes in three ways. First, it could boost potential growth by investing in activities that raise productivity. Second, it could help monetary policy become more effective by increasing the supply of government bonds and raising the equilibrium real interest rate. Third, it would help reduce income inequality.

Journal

Business Economics – Springer Journals

Published: Jul 1, 2016

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