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New classical macroeconomic theory and fiscal rules: some methodological problems

Abstract:

This paper evaluates the theoretical basis of New Classical Macroeconomics (NCM) in general, and in particular the basis of one of NCM's main policy conclusions, namely fiscal rules. We analyse NCM in terms of its assumptions of market clearing and rational expectations formations and show how its call for fiscal rules is derived. We argue that NCM is describing a static world with no uncertainty. Indeed, we argue that fixed fiscal rules can only make sense in such a world. In view of NCM's i...

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Publication status:
Published
Peer review status:
Peer reviewed

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Institution:
University of Cape Town
Role:
Author
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Institution:
University of Oxford
Oxford college:
Kellogg College
Role:
Author
Publisher:
Oxford University Press Publisher's website
Journal:
Contributions to Political Economy Journal website
Volume:
16
Issue:
1
Pages:
1-21
Publication date:
1997-01-01
EISSN:
1464-3588
ISSN:
0277-5921
Language:
English
Keywords:
Subjects:
UUID:
uuid:51ab493f-c729-4d14-8e25-ccbd3d4479df
Local pid:
ora:2194
Deposit date:
2008-07-10

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