Stabilità macroeconomica e vincolo di bilancio pubblico - Macroeconomic stability and government’s budget restraint

Francesco Ferrari ()
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Francesco Ferrari: Università degli Studi di Torino, Postal: Via Verdi, 8 - 10124 Torino, Italy, http://www.unito.it/

Economia Internazionale / International Economics, 1984, vol. 37, issue 3-4, 288-307

Abstract: It’s well-known that the solutions of the IS-LM models are stable if the IS curve is downward sloping. This property induced Hicks to consider the keynesian theory and the classical one as two particular cases of a general model. It’s also well-known that the government’s budget restraint is introduced into IS-LM models to integrate the monetary effects of fiscal policy. This work argues that: a) if it’s used a recursive mechanism, the equilibrium of the keynesian case is stable, but not the equilibrium of the classical one; b) the government’s budget constraint Is only a rule for creating money and/or public debt, but not a tool f or financing the income induced by a growth of government expenditure.

Date: 1984
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