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Chapter 1&nbsp; The Keynesian Revival&nbsp;<div> 1.1 Introduction</div><div> 1.2 The G20 Fiscal Response to the GFC</div><div> 1.3 Non-Keynesian Perspectives</div><div> 1.3.1 Economics or Politics?</div><div> 1.3.2 The Paradox of Spending</div><div> 1.4 Gauging Multipliers</div><div> 1.5 What Lies Ahead</div><div> </div><div>Chapter 2&nbsp; Macro-Foundations for Fiscal Analysis</div> 2.1 Introduction<div> 2.2 Macro-accounting Foundations</div><div> 2.2.1 Sources of Funds</div><div> 2.3 Saving, Investment and Budget Deficits</div><div> 2.3.1 Budget Deficits and Government Borrowing</div><div> 2.3.2 Private Investment and Saving</div><div> 2.3.3 A Loanable Funds Framework</div><div> 2.4 Aggregate Demand and the Keynesian Cross</div><div> 2.4.1 Non-Keynesian Perspectives</div><div> 2.5 Output, Absorption and the Trade Balance</div><div> 2.5.1 Expenditure-Output Independence</div><div> 2.6 Conclusion</div><div> </div><div>Chapter 3&nbsp; Budget Deficits, Public Debt and Crowding Out&nbsp;</div><div> 3.1 Introduction</div><div> 3.2 Closed Economy Loanable Funds Framework</div><div> 3.2.1 Modelling Global Financial Crises</div><div> 3.2.2 Macroeconomic Policy Response</div><div> 3.3 Open Economy Loanable Funds Framework</div><div> 3.4 Higher Government Spending</div><div> 3.4.1 Open Economy:&nbsp; PCM</div><div> 3.4.2 Open Economy:&nbsp; ICM</div><div> 3.5 Income Tax Cuts</div><div> 3.6 Balanced Budget</div><div> 3.7 Expected Depreciation</div><div>3.8 Conclusion</div><div><br></div><div>Chapter 4&nbsp; Budget Deficits and National Income</div><div> 4.1 Introduction</div><div> 4.2 Investment, National Output and National Income</div><div> 4.3 Higher Government Spending</div><div> 4.3.1 Closed Economy</div><div> 4.3.2 Open Economy: PCM</div><div> 4.3.3 Open Economy: ICM</div><div> 4.4 Income Tax Cuts</div><div> 4.5 Balanced Budget</div><div> 4.6 Credit Rating Downgrades and Expected Depreciation</div><div> 4.7 Public Investment</div><div> 4.7.1 Open Economy: PCM</div><div> 4.7.2 Open Economy: ICM</div><div> 4.8 Conclusion</div><div><br></div><div>Chapter 5&nbsp; Fiscal Policy, Money and the Exchange Rate</div><div> 5.1 Introduction</div><div> 5.2&nbsp; The Basic Model</div><div> 5.2.1 The Real Sector&nbsp;</div><div> 5.2.2 The Monetary Sector&nbsp;</div><div> 5.2.3&nbsp; &nbsp;Price Level Dynamics</div><div> 5.2.4&nbsp; &nbsp;Longer Run Adjustment</div><div> 5.3.&nbsp; Monetary Policy versus Fiscal Policy&nbsp;</div><div> 5.3.1 Monetary Stimulus&nbsp;</div><div> 5.3.2 Fiscal Stimulus</div><div> 5.3.3 Public Investment and Business Tax&nbsp;&nbsp;</div><div> 5.4&nbsp; Conclusion&nbsp;</div><div> Appendix</div><div><br></div><div>Chapter 6&nbsp; Fiscal Policy in a Dependent Economy</div><div> 6.1 Introduction</div><div> 6.2 The Two Sector Model</div><div>6.2.1 Expenditure and Output in the Tradable and Not-tradable Sectors</div><div> 6.2.2 Monetary Relations</div><div> 6.2.3 The External Accounts and Capital Mobility</div><div> 6.3 Increased Government Spending</div><div> 6.3.1 Higher Spending on Tradables</div><div> 6.3.2 Higher Spending on Non-Tradables</div><div> 6.4 Unsustainable Current Account Deficits and Fixed Exchange Rates</div><div> 6.4.1 Unsustainable Current Account Deficits</div><div> 6.4.2 Government Spending Under Fixed Exchange Rates: ICM </div><div> 6.5 Conclusion</div><div>Chapter 7&nbsp; Fiscal Consolidation</div><div> 7.1 Introduction</div><div> 7.2 Public Debt Sustainability</div><div> 7.3 Reduced Government Spending</div><div> 7.3.1 Closed Economy</div><div> 7.3.2 Open Economy: PCM</div><div> 7.3.3 Open Economy: ICM</div><div> 7.3.5 Dependent Economy</div><div> 7.3.4&nbsp; &nbsp;Aggregate Expenditure-Output Model</div><div> 7.4 Income Tax Rises</div><div> 7.5 Repairing the Fiscal Accounts</div><div> 7.6 Conclusion</div><div> </div><div>Chapter 8&nbsp; Recasting Fiscal Policy</div><div> 8.1 Introduction</div><div> 8.2 The Confidence Paradox</div> 8.3 Recasting Fiscal Policy<div> 8.4 Summing Up</div><div><br></div><div>Bibliography</div><div><br></div>

<b>Anthony J Makin</b> is Professor of Economics at Griffith University, Australia, and has previously served with the International Monetary Fund and Australian departments of Finance, Foreign Affairs and Trade and The Treasury.&nbsp; He has published widely and is a member of the National Economic Panel of the Economic Society of Australia.

<div>This book presents alternative macroeconomic perspectives, primarily open economy, on the limitations of discretionary fiscal policy, with a focus on government spending.&nbsp; Following an overview on the post-crisis Keynesian revival and of the macro-foundations needed for subsequent analysis, different perspectives are expounded that highlight the failings of fiscal activism. These perspectives include extended loanable funds analysis, an expenditure-output related model incorporating money and exchange rates, and a dependent economy framework. The approaches are used to examine investment and net export crowding out effects and their implications for national income, and are then adapted to show the macroeconomic impact of different fiscal consolidation measures, revealing that the nature of fiscal repair is critical. A concluding chapter evaluates the nexus between budgetary policy and confidence, summarises the key failings of fiscal activism, and suggests fiscal policy goals.&nbsp;</div><div><br></div><div>The book will appeal to university lecturers and researchers in macroeconomics and economists working in government and the private sector.</div><div><br></div>

<p>Radically re-casts fiscal policy following the limited economic growth after the Global Financial Crisis</p><p>Gathers together a wide variety of perspectives on possible alternatives to fiscal activism</p><p>Considers how post GFC experience has parallels with the post-Depression experience with regard to investment uncertainty, and trade protectionism</p>

“Since the Keynesian Revolution, economists have divided themselves in two almost religious camps: the True Believers who, as a past president of the American Economic Association, stated in the 1960s, thought that Keynes had said the last word on how to deal with recessions, and the Atheists who, especially in the late 1970s and in the 1980s, concluded that Keynes’ teaching were wrong. <br>After the 2008 financial crises, the True Believers re-emerged and managed to influence the policies of many countries, defining as “stupid” policymakers who did not adopt Keynesian policies. In this lucidly-written and well- argued book, Professor Makin presents many theoretical reasons why policymakers would be advised to listen to the Atheists. This reviewer found most of those reasons highly convincing.” (Vito Tanzi, Former Director of the Fiscal Affairs Department of the IMF)<p>“Tony Makin's book does a great service to modern economics. Crude Keynesians focus on effects of spending increases or tax cuts.&nbsp; Makin analyses the offsetting factors that exist in the real world of fiscal policy implementation. Government spending usually creates debt.&nbsp; Debt, especially large amounts, limits spending as lenders require interest to be paid and its repayment.&nbsp; Does increased government increase or decrease confidence of households and business?&nbsp; Another example where standard crude Keynesian analysis breaks down.” (Peter Jonson, former Head of Research, Reserve Bank of Australia)</p>

<p>“The attempted revival of activist fiscal policy as a response to the financial crisis of 2008 was based in part on a failure to fully appreciate the role of monetary policy and the exchange rate. In an economy with an inflation targeting central bank and floating exchange rate, there is no reason to expect fiscal policy to be effective in stabilising aggregate demand.&nbsp; Makin carefully elucidates the analytical foundations of this view of fiscal policy ineffectiveness in a way that is accessible to policymakers, as well as academics.” (Stephen Kirchner, Program Director, United States Studies Centre, University of Sydney)</p>