The Role of Fiscal Policy

Pavlina Tcherneva

International Journal of Political Economy, 2012, vol. 41, issue 2, 5-25

Abstract: The article evaluates the fiscal policy initiatives during the Great Recession in the United States. It argues that, although the nonconventional fiscal policies targeted to the financial sector dwarfed conventional countercyclical stabilization efforts directed to the real sector, the relatively disappointing impact on employment was due not only to misdirected funding priorities but to an exclusive and ill-advised focus on the output gap rather than on the employment gap. The paper argues further that conventional pump priming policies are incapable of closing this employment gap. To tackle the formidable labor market challenges observed in the United States over the past few decades, policy can benefit from a fundamental reorientation away from trickle-down Keynesianism and toward what is termed here "a bottom-up approach" to fiscal policy. This approach also reconsiders the nature of countercyclical government stabilizers.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.2753/IJP0891-1916410201 (text/html)
Access to full text is restricted to subscribers.

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:mes:ijpoec:v:41:y:2012:i:2:p:5-25

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MIJP20

DOI: 10.2753/IJP0891-1916410201

Access Statistics for this article

More articles in International Journal of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().