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Monetary and Budgetary-Fiscal Policy Interactions in a Keynesian Context: Revisiting Macroeconomic Governance

In: Aspects of Modern Monetary and Macroeconomic Policies

Author

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  • Angel Asensio

Abstract

According to the New Consensus Macroeconomics (NCM), economic policy deals with different problems depending on the length of the period considered. If the period is long enough, competitive forces drive the rate of unemployment to the ‘natural level’. Theoretically, a succession of such periods should not exhibit statistical evidence of unemployment pressure on wages or consumer prices; the Phillips relation should look vertical. In each of these ‘long periods’, expected prices variations equal the effective values, and contracts are negotiated in accordance with the right expectations. That is the reason why systematic (hence expected) stimulations of aggregate demand1 do not reduce real wages and unemployment; they only strengthen inflation.

Suggested Citation

  • Angel Asensio, 2007. "Monetary and Budgetary-Fiscal Policy Interactions in a Keynesian Context: Revisiting Macroeconomic Governance," Palgrave Macmillan Books, in: Philip Arestis & Eckhard Hein & Edwin Heron (ed.), Aspects of Modern Monetary and Macroeconomic Policies, chapter 6, pages 80-105, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-62734-5_6
    DOI: 10.1057/9780230627345_6
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    Citations

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    Cited by:

    1. Oberholzer, Basil, 2023. "Post-growth transition, working time reduction, and the question of profits," Ecological Economics, Elsevier, vol. 206(C).
    2. Angel Asensio & Sébastien Charles & Edwin Le Héron & Dany Lang, 2011. "Recent developments in Post-Keynesian modeling [Los desarrollos recientes de la macroeconomía post-keynesiana]," Post-Print halshs-00664867, HAL.
    3. Angel Asensio, 2006. "Monetary and budgetary-fiscal policy interactions in a Keynesian heterogeneous monetary union," Post-Print halshs-00120406, HAL.
    4. Angel Asensio, 2008. "The growing evidence of Keynes's methodology advantage and its consequences within the four macro-markets framework," Post-Print halshs-00189221, HAL.

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