An avenue for expansionary fiscal contractions

Antonio Afonso

MPRA Paper from University Library of Munich, Germany

Abstract: Expansionary fiscal contractions were first illustrated by several fiscal episodes that occurred in Europe during the 1980s. This paper suggests a simple analytical textbook model that encompasses both Keynesian and non-Keynesian effects of fiscal policy. In such a context, the possibility of expansionary fiscal contractions is linked to the responsiveness of the risk premium of domestic interest rates to the budgetary position of the government and to the existence of credit-rationed consumers.

Keywords: fiscal policy; expansionary fiscal contractions; non-Keynesian effects (search for similar items in EconPapers)
JEL-codes: E62 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2007
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Forthcoming in The Icfai Journal of Public Finance 3.5(2007): pp. 7-15

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Journal Article: An Avenue for Expansionary Fiscal Contractions (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:4593

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