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Monetary and Fiscal Policy in a Long‐Run Macroeconomic Model *
Author(s) -
TURNOVSKY STEPHEN J.
Publication year - 1980
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1980.tb01663.x
Subject(s) - economics , short run , bond , stock (firearms) , monetary economics , monetary policy , fiscal policy , inflation (cosmology) , macroeconomics , finance , mechanical engineering , physics , theoretical physics , engineering
This paper develops a macroeconomic model in which the conventional short‐run system is embedded in a long‐run model, incorporating the dymics of asset accumulation and other longer‐run dynamic adjustments. Most attention is devoted to analyzing the steady state under alternative assumptions regarding government financial policies. It shows how, with full employment ultimately attained, the equilibrium levels of capital, real money balances. real stock of bonds. and the long‐run rate of inflation are simultaneously determined. The effects of an expansion in government expenditure under bond financing and money financing are compared in detail.