Fiscal policy: post- or New Keynesian?

Sebastian Gechert

European Journal of Economics and Economic Policies: Intervention, 2023, vol. 20, issue 2, 338-355

Abstract: This paper asks whether the post-Keynesian or New Keynesian paradigm provides a more realistic description of the effects of fiscal policy on output and consumption. I establish some macro and microeconomic stylized facts on fiscal multipliers and marginal propensities to consume based on the extensive empirical literature. I compare them to basic and extended modelling approaches within the two traditions. The picture is mixed and points to shortcomings in both paradigms. I outline the elements they could learn from each other as well as from some other strands in the literature to create a coherent and convincing Keynesian macro-micro framework of fiscal policy modelling.

Keywords: macroeconomics; fiscal policy; history of economic thought; multiplier; marginal propensity to consume (search for similar items in EconPapers)
JEL-codes: D10 E20 E60 H30 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:20:y:2023:i:2:p338-355

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