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The evolution of fiscal policy theory and the Eurozone

newdigital The evolution of fiscal policy theory and the Eurozone
Article
journal RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI
issue RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2019 - 2
title The evolution of fiscal policy theory and the Eurozone
author
publisher Vita e Pensiero
format Article | Pdf
online since 10-2019
doi 10.26350/000518_000031
issn 0035-676X (print) | 1827-7918 (digital)
€ 6.00

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This paper is devoted to fiscal policy theory and to how its evolution influenced the policy principles implemented from the end of the WWII to nowadays. It shows how the theoretical foundations evolved, from the Keynesian theory according to which public expenditure was conceived as an instrument to sustain aggregate demand and achieve full employment, to the present theoretical framework in which, following the intertemporal approach, it has been downgraded to an external shock. After the occurrence of the great financial crisis a new process of revision started, according to which, in times of declining macroeconomic conditions, fiscal policy has not only short-run effects on income, but also long run effects on potential output. However, it did not yet translate into a new role for fiscal policy at least in the Eurozone.

keywords

Fiscal policy, Keynesian approach, Intertemporal approach, Public finance, Eurozone

Author biography

Dipartimento di Studi Aziendali ed Economici, Università degli Studi di Napoli ‘‘Parthenope’’. Email: rorita.canale@uniparthenope.it.