Alesina and the Keynesians: Austerity and Say's Law

Kates, S 2012, 'Alesina and the Keynesians: Austerity and Say's Law', Atlantic Economic Journal, vol. online, pp. 1-15.


Document type: Journal Article
Collection: Journal Articles

Title Alesina and the Keynesians: Austerity and Say's Law
Author(s) Kates, S
Year 2012
Journal name Atlantic Economic Journal
Volume number online
Start page 1
End page 15
Total pages 15
Publisher Springer New York LLC
Abstract Alberto Alesina's empirical work has led to re-examination of Keynesian theory and policy. His demonstration that reductions in public spending are often followed by improvements in economic conditions is a direct contradiction of modern macroeconomic theory, where increases in aggregate demand are seen as the most important precondition for recovery even where such increases in demand are unproductive in themselves and largely wasteful. The present paper suggests that the theoretical framework necessary to understand Alesina's empirical results is embedded within the classical theory of the cycle which argues that only value adding production could lead to recovery. Most importantly, the paper argues that only through a correct understanding of Say's Law of markets can Alesina's empirical results be properly understood.
Subject History of Economic Thought
Macroeconomic Theory
Macroeconomics (incl. Monetary and Fiscal Theory)
Keyword(s) Alberto Alesina
Austerity
Classical theory of the cycle
Economic policy
Keynesian economics
Say's Law
DOI - identifier 10.1007/s11293-012-9330-6
Copyright notice © 2012 International Atlantic Economic Society
ISSN 0197-4254
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