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The Efficacy of Bond-Financed Fiscal Policy

Author

Listed:
  • James R. Barth

    (George Washington University)

  • James T. Bennett

    (George Mason University)

  • Manuel H. Johnson

    (George Mason University)

  • Richard H. Sines

    (George Washington University)

Abstract

This article examines the impact of fiscal policy on economic activity in the framework of the important model developed by Blinder and Solow which assesses the macroeconomic impact of federal budgetary actions. In addition to raising some questions about Blinder and Solow's conclusions regarding the efficacy of bond-financed fiscal policy, we introduce some logical extensions of their original model to examine the robustness of various income and interest rate multipliers. It is shown that even minor modifications are sufficient to bring about reversals in signs of these key multipliers. In sum, this article not only answers some important questions but also raises equally significant issues regarding the efficacy of fiscal policy

Suggested Citation

  • James R. Barth & James T. Bennett & Manuel H. Johnson & Richard H. Sines, 1980. "The Efficacy of Bond-Financed Fiscal Policy," Public Finance Review, , vol. 8(3), pages 323-344, July.
    • Handle: RePEc:sae:pubfin:v:8:y:1980:i:3:p:323-344
    DOI: 10.1177/109114218000800305
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    References listed on IDEAS

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    1. Blinder, Alan S. & Solow, Robert M., 1976. "Does fiscal policy still matter? : A reply," Journal of Monetary Economics, Elsevier, vol. 2(4), pages 501-510, November.
    2. Tobin, James, 1972. "Friedman's Theoretical Framework," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 852-863, Sept.-Oct.
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    5. Blinder, Alan S. & Solow, Robert M., 1976. "Does fiscal policy matter? : A correction," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 183-184.
    6. Scarth, William M., 1976. "A note on the `crowding out' of private expenditures by bond-financed increases in government spending," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 385-387.
    7. Friedman, Milton, 1972. "Comments on the Critics," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 906-950, Sept.-Oct.
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    Cited by:

    1. Yasuo Kofuji, 1984. "On the Efficacy of Fiscal Policy and Price Level Changes," Public Finance Review, , vol. 12(2), pages 167-181, April.
    2. James L. Butkiewicz, 1982. "On Fiscal Policy and Macroeconomic Stability," Public Finance Review, , vol. 10(1), pages 39-47, January.
    3. Yeung-Nan Shieh, 1982. "The Efficacy of Bond-Financed Fiscal Policy," Public Finance Review, , vol. 10(1), pages 119-125, January.

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