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Searching for Keynes: An Essay on the Political Economy of Fiscal Policy, with Application to Canada, 1870-2000 - revised version

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  • Stanley L. Winer
  • J Stephen Ferris

Abstract

Keynes' General Theory (1936) is arguably one of the most important books of the twentieth century. His ideas for stabilizing the aggregate economy have profoundly influenced economic theory as well as popular opinion about what governments can and should do with respect to the business cycle. On the other hand, whether Keynesian theory has substantially altered the course of public policy remains an open question. In this paper we identify the elements required for any investigation of the impact of Keynes' ideas on policy choices and then conduct our own 'search for Keynes', applying an intertemporal spatial voting framework to study the fiscal history of the Government of Canada from 1870 to 2000. The long time series allows the construction of a counterfactual – one of several essential elements - showing what governments would have planned to do ‘after Keynes’, if Keynes' ideas had not in fact been present. Our results suggest that textbook Keynesianism is identifiable in the Canadian data.

Suggested Citation

  • Stanley L. Winer & J Stephen Ferris, 2003. "Searching for Keynes: An Essay on the Political Economy of Fiscal Policy, with Application to Canada, 1870-2000 - revised version," CESifo Working Paper Series 1016, CESifo.
    • Handle: RePEc:ces:ceswps:_1016
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    More about this item

    Keywords

    Keynesianism; spatial voting; permanent versus transitory policy; political equilibrium; liquidity constraints;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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