Internal Objectives: Empirical Evidence

Abstract

This chapter assembles empirical evidence from a number of sources that throws light on the probable validity of the hypotheses raised in Chapter 2: namely, that different forms of macroeconomic stimulus have different relative effects on prices for a given effect on real output or employment; in particular, that tax cuts are likely to have less upward effect on prices than government outlays (and some types of tax cut may even have a downward effect on prices) for any given real stimulus to output or employment, and that a monetary expansion is likely to have the greatest upward effect on prices for any given real stimulus.