Tales of expansionary fiscal contractions in two European countries: hindsight and foresight

J. Considine, David Duffy

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    Abstract

    It is ironic that the potential expansionary effects of fiscal contractions have become known as non-Keynesian effects. This paper highlights the fact that Keynes and his contemporaries were aware of such potential perverse effects. It is clear that the important indirect effects of budgetary policy via expectation were known in the 1930s. Moreover, the economists of the time recognised the possibilities before they occurred. This paper supplements the existing research on the Expansionary Fiscal Contraction hypothesis by comparing two periods in economic history, Britain in 1930/1 and Ireland 1986/7, and the accompanying economic thought.
    Original languageEnglish
    Pages (from-to)147-167
    Number of pages21
    JournalJournal of Public Finance and Public Choice
    Volume27
    Issue number2-3
    Publication statusPublished - 2010

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