FISCAL POLICIES IN AN INTERTEMPORAL DISEQUILIBRIUM MACROECONOMIC MODEL |
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| Authors: | John Fender Naehee Moon |
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| Affiliation: | Department of Economics University of Birmingham Edgbaston Birmingham B15 2TT and Economic Analysis Section Research Institute of Industrial Science and Technology, Korea |
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| Abstract: | A two-period macroeconomic model where consumption and investment decisions are given microeconomic foundations is presented. The model is used to analyse the effects of both current and anticipated fiscal expansion; careful attention is paid to the implications of the government's intertemporal budget constraint. It is shown that anticipated fiscal expansion may, in certain circumstances, be expansionary. Also, current fiscal expansion, if financed by bonds which are retired through future money creation, may be contractionary. |
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