Economics at your fingertips  

The Debt Ratio and Sustainable Macroeconomic Policy

Scott T. Fullwiler ()
Additional contact information
Scott T. Fullwiler: University of Missouri-Kansas City and Binzagr Institute for Sustainable Prosperity

World Economic Review, 2016, vol. 2016, issue 7, 12 - 42

Abstract: Neoclassical views on fiscal sustainability are based on several assumptions that are inconsistent with accounting and operational realities of the money system, including dangers of “bond vigilantes” in government debt markets and “printing money” is inherently inflationary. Combining these assumptions with the broader world view of monetary policy as the appropriate sole manager of the macroeconomy, neoclassicals essentially define fiscal sustainability as a policy mix in which fiscal policy “gets out of the way” of “monetary dominance”, defined as the central bank's ability to independently pursue an “optimal” monetary policy. This paper presents an alternative view consistent with real-world accounting and monetary operations; a policy mix in which fiscal policy has an active role is shown to be a more sustainable one. Perhaps surprisingly, this turns out to also not be subject to the neoclassical fears or concerns of a policy regime of fiscal dominance.

Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) ... acroeconomic-policy/ (text/html) (application/pdf)

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:

Access Statistics for this article

World Economic Review is currently edited by Kyla Rushman

More articles in World Economic Review from World Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Jake McMurchie ().

Page updated 2020-06-20
Handle: RePEc:wea:worler:v:2016:y:2016:i:7:p:12