Economic theory of fiscal policy

The first edition of The Economic Theory of Fiscal Policy was welcomed as a major contribution to this important area of public finance. It broke new ground in several ways: in its clear and rigorous analysis of the underlying macroeconomic theory, and particularly of important post-Keynesian developments, in its use of mathematical and modelling techniques and, perhaps above all, in its treatment of the role of fiscal policy in economic growth and in the employment-inflation trade-off, and of stabilization policy in a dynamic, open economy setting.

This new edition has been reset throughout and is substantially changed. Part One has been thoroughly revised and Chapter Three in particular has been rewritten to take account of monetarist arguments which can be assimilated in the extended Keynesian system and which are therefore capable of expression in standard macroeconomic termi nology. An extension of the theory was felt by the authors to be more important than a superficial account of the econometrics of fiscal policy as contained in the original Chapter Ten, From Theory to Practice In place of this, a wholly new chapter has been substituted, which intro duces recent discussion of the conduct of fiscal policy under conditions of uncertainty.