Fiscal Policy in IS-LM Analysis: A Correction
About: This article is published in Journal of Money, Credit and Banking.The article was published on 1970-11-01. It has received 91 citations till now. The article focuses on the topics: Fiscal union & Fiscal imbalance.
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TL;DR: In this article, the authors used disaggregated data on bank balance sheets to provide a test of the lending view of monetary policy transmission and showed that the loan and security portfolios of large and small banks respond differentially to a contraction in monetary policy.
Abstract: This paper uses disaggregated data on bank balance sheets to provide a test of the lending view of monetary policy transmission. We argue that if the lending view is correct, one should expect the loan and security portfolios of large and small banks to respond differentially to a contraction in monetary policy. We first develop this point with a theoretical model; we then test to see if the model's predictions are borne out in the data.
1,073 citations
TL;DR: In this article, the authors focus on the question: does higher public capital accumulation "crowd out" private investment, i.e., induce an ex ante crowding out of private investment.
928 citations
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TL;DR: In this article, the authors focus on the question: does higher public capital accumulation "crowd out" private investment, i.e., induce an ex ante crowding out of private investment.
Abstract: The central focus of this paper is on the question: does higher public capital accumulation ‘crowd out’ private investment? Higher public capital accumulation raises the national investment rate above the level chosen by rational agents and induces an ex ante crowding out of private investment. However, an increase in the public capital stock also raises the return to private capital, which crowds in private capital accumulation. Empirical evidence on the net effect of these opposing forces is presented.
895 citations
Cites background from "Fiscal Policy in IS-LM Analysis: A ..."
...As the former effect tends to stimulate production but the latter effect to raise interest rates, their net impact on output and private investment would be ambiguous, a point discussed by Silber (1970). Blinder and Solow (1973) took such wealth effects as the starting point for their analysis of the effects of fiscal policies, but focused on the requirement that the budget be balanced in long-run equilibrium....
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TL;DR: In this paper, the authors used disaggregated data on bank balance sheets to provide a test of the lending view of monetary policy transmission and found that the empirical results are supportive of this view.
867 citations
565 citations