The Role of Public Investment as Principal Macroeconomic Tool to Promote Long-Term Growth

Mario Seccareccia ()

International Journal of Political Economy, 2011, vol. 40, issue 4, 62-82

Abstract: The "new consensus" in macroeconomics downplayed fiscal policy prior to the financial crisis. This view dramatically changed during and immediately following the crisis. However, this view has witnessed a reversal and returned to the pre-crisis policy perspective, especially since 2010. In this article, the modern "financial balances" view of fiscal policy is analyzed. While this modern framework of analysis, which is diametrically opposed to the new consensus framework, is correct in its emphasis on functional finance (which ensues directly from the latter fiscal policy perspective), the article advocates a return to a view of long-term fiscal policy, which Keynes espoused both in The General Theory and thereafter on the "socialization of investment."

Date: 2011
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DOI: 10.2753/IJP0891-1916400403

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