Economics Dictionary of Arguments
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Mause I 235
Government Debt/Keynesianism: if the
production potential is already fully exploited,
so that higher government spending on
goods and services will lead in the long run
to lower private spending on goods and
services than would be possible without
higher government spending, a deficit should
be accepted from a Keynesian perspective
and expenditure increased to prevent
continued weakness in demand and high
unemployment.
Def Crowding In: Stimulation of private
investment activity through government
>
support for overall economic demand.
>
Government VsKeynesianism: See Government
Keynesianism
Debt/Neoclassical Theories.
Debt
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Keynesianism
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und
Wirtschaft: Ein
integratives
Maus I 277
Government Debt/Keynesianism: According Kompendium
to Keynesian interpretations, deficits in public Wiesbaden 2018
budgets during the recession serve as a
stimulus to strengthen overall economic
demand and thus help to weaken the
economic downturn and reduce the extent of
involuntary unemployment.
Problem: Multiplying factor: Whether active
deficit-spending can fulfil this purpose
depends above all on the answer to the
empirical question of how high the public
spending multiplier is, which provides
Economics Dictionary of Arguments
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information on how strong the effect of
additional, deficit-financed public spending
on gross domestic product is. This question
is still controversial today. (1)
In a crisis in the financial and banking sector
and in economics with flexible exchange
rates the factor seems to be clearly higher. (2)
1. Ethan Ilzetzki, Enrique G. Mendoza, und
Carlos A. Végh. 2013. How big (small?) are
fiscal multipliers? Journal of Monetary
Economics 60 (2): 239– 254.
2. Giancarlo Corsetti und Gernot J. Müller.
2015. Fiscal Multipliers: Lessons from the
Great Recession for Small Open Economies.
Research Report, Stockholm: Swedish Fiscal
Policy Council.
_____________
Explanation of symbols: Roman numerals indicate the
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contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an
addition from the Dictionary of Arguments. If a German
edition is specified, the page numbers refer to this
edition.
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