On Keynesian effects of (apparent) non-Keynesian fiscal policies

Rosaria Rita Canale, Pasquale Foresti, Ugo Marani and Oreste Napolitano (napolitano@uniparthenope.it)

Discussion Papers from D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy

Abstract: The aim of the paper is to evaluate the robustness of the theory that claims for restrictive effects of expansionary fiscal policy. It shows that such socalled “non-Keynesian effects” may arise as a consequence of a synchronous and opposite monetary policy intervention. The paper demonstrate this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions - in which Central Banks take into account deficit spending as an element that generate inflation expectations. The econometric analysis shows also that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.

Keywords: Fiscal policy; Monetary policy; Central Banks Policy strategies (search for similar items in EconPapers)
JEL-codes: E52 E58 E62 E63 (search for similar items in EconPapers)
Date: 2007-04-01
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: On keynesian effects of (apparent) non-keynesian fiscal policies (2008)
Working Paper: On Keynesian effects of (apparent) non-Keynesian fiscal policies (2007)
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