Jump to ContentJump to Main Navigation
Rethinking ExpectationsThe Way Forward for Macroeconomics$
Users without a subscription are not able to see the full content.

Roman Frydman and Edmund S. Phelps

Print publication date: 2013

Print ISBN-13: 9780691155234

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691155234.001.0001

Show Summary Details
Page of

PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 19 September 2021

Stabilization Policies and Economic Growth

Stabilization Policies and Economic Growth

(p.351) Chapter Eleven Stabilization Policies and Economic Growth
Rethinking Expectations

Philippe Aghion

Enisse Kharroubi

Princeton University Press

This chapter examines the effect of the cyclical pattern of fiscal and monetary policies on economic growth. Economists generally see no connection between the way stabilization policies are implemented and the average speed at which the affected economy grows. If anything, growth theories tend to highlight the importance of stable and consistent policies as exemplified by recommendations to run prudent fiscal and monetary policies through balanced fiscal accounts or moderate inflation. Yet the view that policy recommendations to foster long-term growth should stop at calls for prudent fiscal and monetary policies has recently been challenged. Drawing on cross-industry, cross-country panel data regressions, this chapter explores the effect of fiscal policy countercyclicality and monetary policy countercyclicality. It shows that industries with greater financial constraints tend to grow faster in countries with more stabilizing fiscal or monetary policies.

Keywords:   economic growth, stabilization policies, fiscal policy, countercyclicality, monetary policy

Princeton Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.