Aspects of the Theory of Fiscal Policy

  • Maurice Peston


The purpose of this chapter is to re-examine the standard theory of fiscal policy with a view to seeing where we are at the present time. It is apparent that much of the theoretical literature contradicts certain widely accepted beliefs, held more, perhaps, by market practitioners than by professional economists. It is also the case that existing theory has certain limitations which have not been at all easy to overcome. In particular, it is nearly as true as it was fifty years ago that except in very simple cases it has not been possible to incorporate stock theories and flow theories within a unified framework.


Exchange Rate Interest Rate Monetary Policy Current Account Fiscal Policy 
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© National Economic Development Office 1988

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  • Maurice Peston

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