Effects on Real Output

Abstract

It would facilitate the setting of macroeconomic policy if one could generalise about the relative effects of each of the broad macroeconomic instruments on each macroeconomic objective. In the present context, it would be convenient to be able to say, for example, that government outlays generally have a more inflationary effect (at any rate for a given stimulus to real output or employment) than do tax cuts with the same effect on the budget balance; or that government outlays have a bigger upward effect on real output than a tax cut having the same effect on the budget balance.