government budget

Publication date: 5 Mar 2018 | Publication type: NIESR Discussion Paper | Theme: Macroeconomics, Britain & Finance | Authors: Farmer, R | External authors: Zabczyk, P | JEL classification: E0, H62 | NIESR discussion paper number: 487
We refer to the idea that government must ‘tighten its belt’ as a necessary policy response to higher indebtedness as the household fallacy. We provide a reason to be skeptical of this claim that holds even if the economy always operates at full employment and all markets clear. Our argument rests...