A Negative Fiscal Multiplier?

Lougheed, Alan L. (2001) A Negative Fiscal Multiplier?. Discussion Paper No 293, School of Economics, The University of Queensland.

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Author Lougheed, Alan L.
Title A Negative Fiscal Multiplier?
School, Department or Centre School of Economics
Institution The University of Queensland
Open Access Status Other
Report Number Discussion Paper No 293
Publication date 2001-08-01
Subject 340213 Economic Development and Growth
Abstract/Summary The so-called negative fiscal multiplier concept comes from the neo-classical free market economic philosophy and is found useful in arguing that fiscal stabilisation policy may produce results contrary to those expected under Keynesian analysis in which the (positive) fiscal multiplier has traditionally been accepted as the norm. As a result, 'fiscal consolidation' (FC hereafter), that is, the creation and maintenance of the classical balanced budget, ensures that fiscal policy cannot be used for stabilising the economy. Indeed, any attempt to do so will be harmful. This idea has been advanced and research into its possible existence during the last twenty years has produced some encouraging results. This paper examines this research in further detail.
Keyword Multipliers
Free enterprise
References International Monetary Fund, World Economic Survey, Monthly Economic Indicators. various issues. International Monetary Fund, World Economic Survey, October 1998. Makin, Tony, (1998) 'When contractionary fiscal policy is expansionary', Agenda, 5, pp. 419-426. McDermott, C. John and Wescott, Robert F. (1996) Fiscal Reforms that Work, Washington: International Monetary Fund. Organisation for Economic Co-Operation and Development (OECD) (various), World Economic Outlook, Paris. Organisation for Economic Co-Operation and Development (OECD), (various), Economic Survey: Denmark, Economic Survey: Ireland, and Economic Survey: New Zealand. The Economist (various issues) Theobold, Robert (1999) Business History Review, 5 November. p. 52.

Document type: Department Technical Report
Collection: Discussion Papers (School of Economics)
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Created: Thu, 05 Feb 2004, 10:00:00 EST