Fiscal Policy, Interest Sensitive Aggregate Supply and the Costs of Disinflation

Anthony E Myatt and William M Scarth

The Manchester School of Economic & Social Studies, 1987, vol. 55, issue 2, 144-57

Abstract: Many countries have tried to cushion the short-run effect of monetary disinflation on unemployment by keeping fiscal policy expansionary. This paper studies whether this use of fiscal policy is made ineffective by aggre gate supply-side effects of interest rates. Except for the existence of these supply-side effects, the model is standard: rational expectations, sticky wages in the short-run, and an exogenous natural rate in full equilibrium. The analysis is combined with empirical evidence to demonstrate that the perverse effects that can follow from fiscal policy are significant for macroeconomic policy. Copyright 1987 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1987
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:55:y:1987:i:2:p:144-57

Access Statistics for this article

More articles in The Manchester School of Economic & Social Studies from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().