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Inflation, economic activity and the operation of fiscal, foreign and monetary impulses in the Netherlands — A preliminary analysis, 1953–1973

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Summary

This paper tests both the strong and weak versions of the fiscal, foreign and monetary impulse hypotheses holding that each of these impulses is either a sufficient or a necessary condition for fluctuations in price and output to occur.

Four impulses are distinguished: a fiscal impulse being a linear combination of autonomous changes in government expenditures and taxes, two foreign impulses measured by the growth rates of world trade and import prices, and a monetary impulse measured by (changes in) the growth rate of the stock of domestic or world money.

When tested against the Dutch post-war experience of inflation and output fluctuations, all strong impulse hypotheses have to be rejected, as do the weak fiscal and foreign world trade hypotheses with respect to inflation and the weak fiscal hypotheses with respect to output growth. The weak foreign and monetary impulse hypotheses of output fluctuations, however, and the weak foreign import price and monetarist hypotheses of inflation are not rejected.

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  1. Netherlands School of Economics, University of Rotterdam, Rotterdam, The Netherlands

    Pieter Korteweg

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Korteweg, P. Inflation, economic activity and the operation of fiscal, foreign and monetary impulses in the Netherlands — A preliminary analysis, 1953–1973. De Economist 123, 559–637 (1975). https://doi.org/10.1007/BF02078322

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