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An integration of short run neokeynesian analysis and growth theory

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Summary

The paper provides a synthesis of short run Neo-Keynesian theory and long run growth models. The general approach is illustrated with the analysis of the short run and long run effect of changes in government spending when government budget deficits and surpluses are bond-financed. Such pure fiscal policy actions are shown to have long run effects on real variables even in a full employment model. The stability properties of the model turn out to depend crucially on the speed of adjustment of inflationary expectations.

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Authors and Affiliations

  1. Princeton University, Princeton, USA

    Willem H. Buiter

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  1. Willem H. Buiter
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Additional information

This paper is based on my Ph.D. DissertationTemporary Equilibrium and Long-Run Equilibrium. The advice and help of James Tobin, Gary Smith and Katsuhito Iwai are gratefully acknowledged. I have also benefitted from discussions with Gregory Chow. The detailed and wide-ranging comments of Dr. Th. C. M. J. van de Klundert and Dr. S. K. Kuipers on earlier drafts of this paper were most valuable, both as regards substance and form.

Assistant Professor of Economics and International Affairs, Princeton University.

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Buiter, W.H. An integration of short run neokeynesian analysis and growth theory. De Economist 125, 340–359 (1977). https://doi.org/10.1007/BF01479116

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