Giuseppe Fontana

Whither New Consensus Macroeconomics? The role of government and fiscal policy in modern macroeconomics

22 Seiten · 3,40 EUR
(15. Oktober 2009)

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In “Whither New Consensus Macroeconomics? The role of government and fiscal policy in modern macroeconomics” Giuseppe Fontana considers one of the main criticisms of the NCM, namely the absence of any essential role for the government and fiscal policy. Given the size of the public sector and the increasing role of fiscal policy in modern economies, this simplifying assumption of the NCM model is difficult to defend. This chapter argues that conventional arguments used to support this controversial assumption, including historical reasons, theoretical propositions, or practical issues do not have solid foundations. There is in fact nothing inherently monetary in the nature of stabilisation policies in the model. Fiscal policy could play a role at least as important as monetary policy in the NCM model, Fontana concludes.