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Unformatted text preview: f the world, has not stopped politicians in the past, and will not stop them in the future, from pursuing misguided policies. At home, the explosion of public-sector debt (which has doubled, as a ratio to GDP, between 1991 and 2000), similarly severely limits the scope for further expansionary fiscal policies. Second, not only are there clear limits to the pursuit of such expansionary policies, but it can also be argued that they have so far met with only limited success. It is true that traditional ‘crowding out’ appears to have been absent, given the abundance of private savings and the pursuit by the authorities of an accommodating monetary policy, but the multipliers associated with fiscal expansion may not have been all that large. Expenditure increases have been concentrated on, largely wasteful, infrastructure projects designed to appeal to important political constituents. Tax cuts, on the few occasions on which they were enacted, appear, in the view of some of the policy-makers at le...
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This note was uploaded on 02/03/2014 for the course ECON 204 taught by Professor Devero during the Summer '13 term at American University of Sharjah.

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