Show Summary Details

On Fiscal Policy and Budget Deficits

Philip Arestis and Malcolm Sawyer

Abstract

A major argument used against the use of fiscal policy comes from the view that there are automatic forces within an economic system to ensure high levels of demand. This paper argues that the case for fiscal policy in general rests on the proposition that there are no such market forces that ensure high levels of demand. There is, thus, a need for macroeconomic policy to perform this task. The argument against fiscal policy to the effect that it does not raise the level of economic activity, does not apply when this view of fiscal policy is adopted.

Full Text

The full text of this journal article is available as a pdf