Tales of Expansionary Fiscal Contractions in Two European Countries: Hindsight and Foresight

John Considine and David Duffy

No 120, Working Papers from National University of Ireland Galway, Department of Economics

Abstract: It is ironic that the potential expansionary effects of fiscal contractions have become known as non-Keynesian effects. This paper highlights the fact that Keynes and his contemporaries were aware of such potential perverse effects. It is clear that the important indirect effects of budgetary policy via expectation were known in the 1930s. Moreover, the economists of the time recognised the possibilities before they occurred. This paper supplements the existing research on the Expansionary Fiscal Contraction hypothesis by comparing two periods in economic history, Britain in 1930/1 and Ireland 1986/7, and the accompanying economic thought.

JEL-codes: B2 (search for similar items in EconPapers)
Date: 2007, Revised 2007
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Persistent link: https://EconPapers.repec.org/RePEc:nig:wpaper:0120

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