Alternative modes of deficit financing and endogneous monetary and fiscal policy in the U.S.A. 1923–1982

Abstract

This paper first investigates the effects of alternative modes of deficit financing on the unemployment rate, the inflation rate and the real interest rate, within the framework of a small complete macroeconomic model. Secondly, it examines the nature of monetary and fiscal reaction functions. The two periods 1923–1960 and 1961–1982 are considered, with substantial differences in behaviour and policy being shown to exist between them. The most important conclusion is that long‐run monetary neutrality properties shown to exist over the latter period are not intrinsic to the U.S. economy, but rather are the result of the stabilization policies being conducted over that period.

Fiscal Policy in Bosnia and Herzegovina - An Instrument for Faster Growth or Economic Stagnation?

“…If we analyze countries around the world, it can be noticed that each country conducts its fiscal policy differently, and it is therefore difficult to find two countries that have identical fiscal policies. Some economies, such as the United States, operate on a more significant use of direct taxes as part of fiscal policy (Turnovsky et al, 1987) in contrast to the EU, where the ratio of indirect taxes to the functioning of fiscal policy is more significant (Wildasin, 2000). Bosnia and Herzegovina, like the EU, has a high importance of indirect taxes in conducting fiscal policy.…”