A History of the U.S. Federal Budget and Fiscal Policy

David M Kiefer

Public Finance = Finances publiques, 1988, vol. 43, issue 1, 113-37

Abstract: The contention, based on rational expectations theory, that fiscal policy has never been part of U.S. government practice is investigated, but is not supported by an econometric model of the federal budget. The historical record suggests that the economic stimulus of military spending during World War II drove home the Keynesian lesson that government should be responsible for stabilizing the economy. The practice of fiscal policy underwent a major transition about then. However, there is also weak support for the political business cycle hypothesis that incumbent presidents use fiscal policy to generate short-term economic prosperity during election years.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:43:y:1988:i:1:p:113-37

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