Options
Current-account targeting and the equilibrium approach to fiscal policy
Author(s)
Date Issued
1992-05
Date Available
2009-12-03T14:32:23Z
Abstract
Internal and external balance are the twins goals of traditional Keynesian macroeconomic policy. New classical economists question whether either of these are related to welfare, since employment fluctuations may be Pareto-efficient, while the current-account balance is perceived as the outcome of saving and investment decisions by intertemporally-optimising agents. The present paper shows, however, that the current-account effects and welfare effects of various types of fiscal policy are directly related within the New Classical model, so that the response of the current account can be used to elicit information about the optimality or otherwise of government spending. The equilibrium approach therefore provides a microfoundation for "external balance" as an intermediate target for fiscal spending.
External Notes
A hard copy is available in UCD Library at GEN 330.08 IR/UNI
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP92/8
Subject – LCSH
Fiscal policy
Equilibrium (Economics)
Balance of payments
Macroeconomics
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
File(s)
Owning collection
Views
1959
Last Week
1
1
Last Month
2
2
Acquisition Date
Apr 18, 2024
Apr 18, 2024
Downloads
169
Acquisition Date
Apr 18, 2024
Apr 18, 2024