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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.
- Summer '13