Fiscal Policy, the Sraffian Supermultiplier and Functional Finance

Peter Skott, Júlio Fernando Costa Santos () and José Luís Oreiro
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Júlio Fernando Costa Santos: Instituto de Economia e Relações Internacionais (IERI), Universidade Federal de Uberlândia (UFU), Brazil

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Sraffian supermultiplier models (SSM) try to identify autonomous components of demand. The most plausible candidate is government consumption. Descriptively, however, government consumption does not grow at a constant rate, and prescriptively there is no justification for keeping constant the growth rate of government consumption, irrespective of economic performance. An active fiscal policy guided by principles of functional finance can produce more powerful stabilization, avoid overheating and excessive utilization rates, and secure faster adjustments of the growth rate towards its target level.

Keywords: Fiscal Policy; Sraffian Supermultiplier; Functional Finance (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac and nep-pke
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