The Sector Financial Balances Model of Aggregate Demand and Austerity
Scott T. Fullwiler
Wartburg College; Bard College - The Levy Economics Institute
June 9, 2011
This paper uses the sector financial balances model of aggregate demand to illustrate the effects of fiscal austerity policies on the economy. It further demonstrates that government deficits are not directly controllable by policy makers but are rather endogenous to the responses of the private sector to austerity policies.
Number of Pages in PDF File: 6
Keywords: fiscal policy, government deficits, sector financial balances, aggregate demand, austerity
JEL Classification: E6, H3, H6working papers series
Date posted: June 10, 2011
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