IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v60y1984i3p284-293.html
   My bibliography  Save this article

Anti‐Stagflationary Tax Cuts and the Problem of Investment

Author

Listed:
  • IAN M. McDONALD

Abstract

If prices are affected by both cost‐push and demand‐pull factors then a change in the policy mix towards fiscal ease can improve output, employment and the balance of trade without the price level rising. However the policy change may reduce investment and so affect the intertemporal allocation of resources. This paper derives conditions for tax cuts to ameliorate inflation and unemployment without a sacrifice of future output. Numerical examples suggest that one can have no presumption that the conditions are or are not likely to hold in general. The discussion is related to Corden's recent analysis of a ‘free lunch’.

Suggested Citation

  • IAN M. McDONALD, 1984. "Anti‐Stagflationary Tax Cuts and the Problem of Investment," The Economic Record, The Economic Society of Australia, vol. 60(3), pages 284-293, September.
    • Handle: RePEc:bla:ecorec:v:60:y:1984:i:3:p:284-293
    DOI: 10.1111/j.1475-4932.1984.tb00863.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1984.tb00863.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1984.tb00863.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert J. Gordon, 1971. "Inflation in Recession and Recovery," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 2(1), pages 105-166.
    2. Kling, Arnold, 1982. "Imperfect Information and Price Rigidity," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 145-154, January.
    3. repec:bla:ecorec:v:56:y:1980:i:154:p:209-21 is not listed on IDEAS
    4. J. O. N. Perkins, 1979. "The Macroeconomic Mix to Stop Stagflation," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-16039-6, December.
    5. Kaldor, Nicholas [Lord], 1976. "Inflation and Recession in the World Economy," Economic Journal, Royal Economic Society, vol. 86(344), pages 703-714, December.
    6. Corden, W M, 1981. "Taxation, Real Wage Rigidity and Employment," Economic Journal, Royal Economic Society, vol. 91(362), pages 309-330, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ian M. McDonald, 1984. "Trying to Understand Stagflation," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 17(3), pages 32-56, November.
    2. Pulapre Balakrishnan & M Parameswaran, 2019. "Modeling the Dynamics of Inflation in India," Working Papers 16, Ashoka University, Department of Economics.
    3. Amitava Krishna Dutt, 1989. "Sectoral Balance: A Survey," WIDER Working Paper Series wp-1989-056, World Institute for Development Economic Research (UNU-WIDER).
    4. Toshiaki Tachibanaki & Yukiko Yokoyama, 2008. "The Estimation Of The Incidence Of Employer Contributions To Social Security In Japan," The Japanese Economic Review, Japanese Economic Association, vol. 59(1), pages 75-83, March.
    5. Marc Audi & Amjad Ali, 2023. "Public Policy and Economic Misery Nexus: A Comparative Analysis of Developed and Developing World," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 56-73, May.
    6. Aurélien Goutsmedt & Goulven Rubin, 2018. "Robert J. Gordon and the introduction of the natural rate hypothesis in the Keynesian framework," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01821825, HAL.
    7. Toshiaki Tachibanaki, 2003. "The Role of Firms in Welfare Provision," NBER Chapters, in: Labor Markets and Firm Benefit Policies in Japan and the United States, pages 315-338, National Bureau of Economic Research, Inc.
    8. Michael R. Darby & James R. Lothian, 1981. "Exchange Rate Systems and Trends in Inflation," UCLA Economics Working Papers 226, UCLA Department of Economics.
    9. Mahmood A. Zaidi, 1986. "Do Incomes Policies Restrain Wage Inflation? Some Evidence From Australia, Canada, and the United States," The Economic Record, The Economic Society of Australia, vol. 62(4), pages 468-484, December.
    10. Sung Y. Kwack, 1974. "Price linkage in an interdependent world economy: price responses to exchange rate and activity changes," International Finance Discussion Papers 56, Board of Governors of the Federal Reserve System (U.S.).
    11. David Sapsford, 1990. "Primary Commodity Prices and the Terms of Trade," The Economic Record, The Economic Society of Australia, vol. 66(4), pages 342-356, December.
    12. Franz, Wolfgang & Gordon, Robert J., 1993. "German and American wage and price dynamics : Differences and common themes," European Economic Review, Elsevier, vol. 37(4), pages 719-754, May.
    13. Pierre-Yves Hénin, 1983. "L'impact macro-économique d'un choc pétrolier," Revue Économique, Programme National Persée, vol. 34(5), pages 865-896.
    14. William A. Darity & E. V. K. Fitzgerald, 1984. "A Kalecki-Keynes model of world trade, finance, and economic growth," International Finance Discussion Papers 238, Board of Governors of the Federal Reserve System (U.S.).
    15. Loseby, Margaret & Venzi, Lorenzo, 1979. "Floating Exchange Rates and International Trade in Agricultural Commodities," 1979 Conference, September 3-12, 1979, Banff, Canada 182403, International Association of Agricultural Economists.
    16. Abdelaaziz Aït Ali & Yassine Msadfa, 2017. "Manufacturing Employment Elasticity and Its Drivers in Developing and Emerging Countries : Focus on Sub-Saharan Africa," Research papers & Policy papers 1709, Policy Center for the New South.
    17. Nathan Perry & Nathaniel Cline, 2016. "What caused the great inflation moderation in the US? A post-Keynesian view," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 475-502, October.
    18. Kanbur, S M Ravi, 1984. "How to Analyse Commodity Price Stabilization? A Review Article," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 336-358, November.
    19. Nikolsko-Rzhevskyy, Alex & Papell, David H., 2012. "Taylor rules and the Great Inflation," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 903-918.
    20. de Oliveira, Guilherme & Lima, Gilberto Tadeu, 2022. "Economic growth as a double-edged sword: The pollution-adjusted Kaldor-Verdoorn effect," Ecological Economics, Elsevier, vol. 199(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:60:y:1984:i:3:p:284-293. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.