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New classical macroeconomic theory and fiscal rules: some methodological problems

Abstract:

This paper evaluates the theoretical basis of New Classical Macroeconomics (NCM) in general, and in particular the basis of one of NCM's main policy conclusions, namely fiscal rules. We analyse NCM in terms of its assumptions of market clearing and rational expectations formations and show how its call for fiscal rules is derived. We argue that NCM is describing a static world with no uncertainty. Indeed, we argue that fixed fiscal rules can only make sense in such a world. In view of NCM's i...

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Publisher:
Oxford University Press
Journal:
Contributions to Political Economy More from this journal
Volume:
16
Pages:
1 - 21
Publication date:
1997-01-01
ISSN:
0277-5921
Language:
English
UUID:
uuid:07920c7d-0765-46c9-a446-b3619a9df95e
Local pid:
oai:economics.ouls.ox.ac.uk:13863
Deposit date:
2011-08-16

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