"Expansionary fiscal contractions": a standard Keynesian explanation

Göran Hjelm

Journal of Post Keynesian Economics, 2006, vol. 29, issue 2, 327-358

Abstract: In the past 10 to 15 years, it has been argued in the literature on "expansionary fiscal contraction" (EFC) that under certain circumstances, fiscal policy has non-Keynesian effects. We show that the real exchange rate depreciated substantially prior to fiscal contractions with a favorable macroeconomic outcome. The preceding real depreciations functioned like an expenditure-shifting policy, strengthening the current account substantially during periods of successful contraction. In short, there is a standard Keynesian explanation for the findings of the previous empirical studies on the EFC hypothesis.

Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.2753/PKE0160-3477290208 (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:postke:v:29:y:2006:i:2:p:327-358

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.2753/PKE0160-3477290208

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().