The Decline of the Budget-Balancing Doctrine or How the Good Guys Finally Lost

  • Herbert Stein
  • Armen A. Alchian
  • Colin D. Campbell
Part of the Studies in Public Choice book series (SIPC, volume 1)


I hope it is understood that the title of this paper, part of which was assigned to me and part of which I chose, is not to be taken seriously. The title implies that there was a budget-balancing doctrine in 1929, when my story begins, that this doctrine subsequently declined, and that this decline was a defeat for the good guys. I am not sure that any of these propositions is true. However, I want to discuss them and also the question of how the change of attitude towards budget-balancing, to use the more neutral term rather than decline, happened.


Monetary Policy Fiscal Policy Federal Reserve Aggregate Demand Balance Budget 


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  1. 1.
    Eugene B. Riley, Economics for Secondary Schools ( Boston: Houghton Mifflin, 1924 ), p. 259.Google Scholar
  2. 2.
    Jens P. Jensen, Problem of Public Finance ( New York: Thomas Y. Crowell, 1924 ), p. 471.Google Scholar
  3. 1.
    Chicago: University of Chicago Press, 1969.Google Scholar
  4. 2.
    For a recent analysis of the difficulty of administering functional finance, see William Poole, “Reflections on. U. S. Macroeconomic Policy,” Brookings Papers on Economic Activity 1 (1974), pp. 233–246.Google Scholar
  5. Source: Federal Reserve Bank of St. Louis, Federal Budget Trends (Feb. 18, 1976).Google Scholar
  6. 3.
    Darryl R. Francis, “How and Why Fiscal Actions Matter to a Monetarist” Federal Reserve Bank of St. Louis Review, May 1974.Google Scholar
  7. 4.
    For a discussion of this issue, see A. James Meigs, Money Matters (New York: Harper and Row, 1972), Ch. 18.Google Scholar

Copyright information

© H. E. Stenfert Kroese B.V., Leiden 1978

Authors and Affiliations

  • Herbert Stein
  • Armen A. Alchian
  • Colin D. Campbell

There are no affiliations available

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