Fiscal Policy, the Sraffian Supermultiplier and Functional Finance

Authors

Peter Skott, Economics Department, University of Massachusetts - AmherstFollow
Júlio Fernando Costa Santos, Instituto de Economia e Relações Internacionais (IERI), Universidade Federal de Uberlândia (UFU), BrazilFollow
José Luís da Costa Oreiro, Universidade de Brasília (UnB) BrazilFollow

Working Paper Number

2020-12

Publication Date

2020

Abstract

Sraffian supermultiplier models (SSM) try to identify autonomous components of demand. The most plausible candidate is government consumption. Descriptively, however, government consumption does not grow at a constant rate, and prescriptively there is no justification for keeping constant the growth rate of government consumption, irrespective of economic performance. An active fiscal policy guided by principles of functional finance can produce more powerful stabilization, avoid overheating and excessive utilization rates, and secure faster adjustments of the growth rate towards its target level.

DOI

https://doi.org/10.7275/19055617

License

UMass Amherst Open Access Policy

Recommended Citation

Skott, Peter; Costa Santos, Júlio Fernando; and da Costa Oreiro, José Luís, "Fiscal Policy, the Sraffian Supermultiplier and Functional Finance" (2020). UMass Economics Working Papers. 295.
https://doi.org/10.7275/19055617