Why Fiscal Policy Could Not Work

  • Richard A. Werner


Japanese fiscal expenditures were substantial during the 1990s, but did not achieve the desired effects. Even the crowding out effect due to higher interest rates, which the literature recognizes, could not be observed. Since these findings discredit the Keynesian analysis and more recent, related theories, including the IS-LM model, it may be necessary to revisit the type of literature that was prevalent before the Keynesian fiscal multiplier analysis was proposed.


Interest Rate Monetary Policy Central Bank Fiscal Policy Government Expenditure 
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© Richard A. Werner 2005

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  • Richard A. Werner

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