Fiscal deficit reduction programs in developing countries: Stabilization versus growth in the presence of credit rationing

  • John T. Cuddington Georgetown University
Keywords: fiscal policies, macroeconomy, deficit

Abstract

This paper presents a model for analyzing potential conflicts between short-run output and employment effects and medium-run growth effects of various fiscal actions. In the model, both firms and households are intertemporal optimizers; short-run wage stickiness and interest rate controls generate macroeconomic disequilibrium. The analysis focuses on the consequences of various government expenditure or deficit reduction policies.

References

Barro, Robert J. (1974). "Are Government Bonds Net Wealth?", Journal of Political Economy, vol. 82, pp. 1095-1117.

Barro, Robert J., and Hershel I. Grossman (1976). Money, Employment and Inflation, Cambridge, Cambridge University Press.

Cuddington, John T., Per-Olov Johansson and Karl-Gustaf Lofgren (1984). Disequilibrium Macroeconomics in Open Economies, Oxford, Basil Blackwell.

Cuddington, John T., Per-Olov Johansson, Karl-Gustaf Lofgren, and Jose M. Vinals (1986a). "Budget Deficits and the Current Account in the Presence of Classical Unemployment", Economic Journal, vol. 96, pp. 101-119.

Cuddington, John T., Per-Olov Johansson, Karl-Gustaf Lofgren, and Jose M. Vinals (1986b). "Budget Deficits and the Current Account: An Intertemporal Disequilibrium Approach", Journal of International Economics, vol. 21, pp. 1-24.

Malinvaud, Edmond (1977). The Theory of Unemployment Reconsidered, Oxford, Basil Blackwell.

Neary, J. Peter, and Joseph E. Stiglitz (1983). “Towards a Reconstruction of Keynesian Economics: Expectations and Constrained Equilibria", Quarterly Journal of Economics, vol. 98 (Supplement), pp. 199-228.

Persson, Torsten (1982). "Global Effects of National Stabilization Policies Under Fixed and Floating Exchange Rate", Scandinavian Journal of Economics, vol. 84, pp. 165-192.

Steigum, Erling (1983). "Capital Shortage and Classical Unemployment", International Economic Review, vol. 24, pp. 461-473.

Viñals, José M., and John T. Cuddington (1988). "Fiscal Policy and the Current Account: What Do Capital Controls Do?", International Economic Journal, vol. 2, pp. 29-37.

Published
01-01-1992
How to Cite
CuddingtonJ. (1992). Fiscal deficit reduction programs in developing countries: Stabilization versus growth in the presence of credit rationing. Estudios Económicos, 7(1), 31-51. https://doi.org/10.24201/ee.v7i1.306
  • Abstract viewed - 263 times
  • PDF downloaded: 83 times