Rethinking the Relation between Government Spending and Economic Growth: A Composition Approach to Fiscal Policy Instruction for Principles Students

Autor/in	Goldsmith, Arthur H.
Titel	Rethinking the Relation between Government Spending and Economic Growth: A Composition Approach to Fiscal Policy Instruction for Principles Students
Quelle	In: Journal of Economic Education, 39 (2008) 2, S.153-173 (21 Seiten)Infoseite zur Zeitschrift PDF als Volltext Verfügbarkeit
Sprache	englisch
Dokumenttyp	gedruckt; online; Zeitschriftenaufsatz
ISSN	0022-0485
Schlagwörter	Macroeconomics; Economic Progress; Investment; Financial Support; Economics Education; Financial Policy; Government (Administrative Body); Expenditures; Productivity; Introductory Courses; Undergraduate Students; Textbooks + Suchen Sie Ihr Suchwort? Makroökonomie; Economic growth; Wirtschaftswachstum; Investments; Geldanlage; Investiton; Finanzielle Förderung; Wirtschaftskunde; Fiscal policy; Finanzpolitik; Government; Regierung; Ausgaben; Produktivität; Einführungskurs; Textbook; Text book; Schulbuch; Lehrbuch
Abstract	Standard introductory textbook authors assert that an increase in government spending expands aggregate demand in the short run but also raises the interest rate and, thus, crowds out private investment in the long run. Because the decrease in investment results in a smaller capital stock, potential output or production capacity decreases. The author challenges the standard assertion by dividing government spending into two components: public consumption and public investment. The short-run effects of an increase in government spending are the same for both components but the long-run effects are dramatically different. The author demonstrates the importance of the composition of public spending to long-run economic performance, using the conventional graphs found in the leading principles of economics textbooks. Appended are: (1) Influence of an Increase in Government Spending on Public Capital Stock, Private Capital Stock, and Long-Run Aggregate Supply, under Alternative Assumptions about the Composition of the Expansion in Government Expenditures; and (2) The Composition of Government Spending: Affect on National Savings and the Composition of National Investment--An Algebraic Approach. (Contains 1 table and 4 figures.) (Author).
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Erfasst von	ERIC (Education Resources Information Center), Washington, DC
Update	2017/4/10