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8 - What Does Fiscal Policy Do?

Published online by Cambridge University Press:  28 March 2024

Jeremy B. Rudd
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Summary

The chapter examines empirical evidence on the size of the Keynesian multiplier, and discusses how the multiplier emerges from a classical macroeconomic model when market clearing is absent. The potential dependence of the multiplier on the state of the economy is discussed in the context of this model. Measures of fiscal stance are compared; in addition, the theory and practice of government debt management are contrasted.

Keywords

Keynesian multiplierfiscal stanceoptimal government debt managementnon-Walrasian modelsnon-market-clearing modelseffective demand
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A Practical Guide to Macroeconomics , pp. 207 - 226
Publisher: Cambridge University Press
Print publication year: 2024

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