Modern Perspectives on Stabilization Policies


The present paper describes recent research on two central themes of Keynes' General Theory: (i) the social waste associated with recessions, and (ii) the effectiveness of fiscal policy as a stabilization tool. The paper also discusses some evidence on the extent to which fiscal policy has been used as a stabilizing tool in industrial economies over the past two decades.
Published as: Addressing the Net Balances Problem As a Prerequisite for EU Budget Reform: a Proposal in CESifo Economic Studies , Vol. 56, No. 2, 221--250, January, 2009