Wednesday, September 10, 2014

Greg Hannsgen — Can Fiscal Policy Stabilize the Economy?

Here is a new Wolfram CDF, which I have constructed based on a macro model.… 
But the bottom line is that (1) guiding fiscal policy with a balanced-budget target leads to instability in all cases, while (2) the output-stabilizing fiscal rule generates a business cycle of varying size or convergence to a point.
Multiplier Effect
Can Fiscal Policy Stabilize the Economy?
Greg Hannsgen

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