The 2008 crisis brought forth a rethinking of the role of economic policies. We would like to analyze a specific point of this debate: the effect of financialization on fiscal policy. In doing so, we find it useful to analyze the debate on the Barro-Ricardo equivalence (BRE), which, since the 1970s, has played an important role in molding the economic policies that fostered the crisis. The original Barro article (1974) attacked counter-cyclical policies as futile, claiming that they could not boost the economy due to private investment crowding-out. We will try to explain why the traditionally understood assumptions of this theory and its conclusions are not helpful for analyzing the contemporary economy before finally offering alternative interpretations.

Mastromatteo, G., Esposito, L., Rethinking Economic Policy in the Age of Financialization: Why the Barro-Ricardo Theory Cannot Make Sense, <<BINZAGR INSTITUTE FOR SUSTAINABLE PROSPERITY POLICY NOTES>>, 16; 2017 (Policy Note No. 116): 1-6 [http://hdl.handle.net/10807/122956]

Rethinking Economic Policy in the Age of Financialization: Why the Barro-Ricardo Theory Cannot Make Sense

Mastromatteo, Giuseppe
Primo
;
Esposito, Lorenzo
Secondo
2017

Abstract

The 2008 crisis brought forth a rethinking of the role of economic policies. We would like to analyze a specific point of this debate: the effect of financialization on fiscal policy. In doing so, we find it useful to analyze the debate on the Barro-Ricardo equivalence (BRE), which, since the 1970s, has played an important role in molding the economic policies that fostered the crisis. The original Barro article (1974) attacked counter-cyclical policies as futile, claiming that they could not boost the economy due to private investment crowding-out. We will try to explain why the traditionally understood assumptions of this theory and its conclusions are not helpful for analyzing the contemporary economy before finally offering alternative interpretations.
2017
Inglese
Mastromatteo, G., Esposito, L., Rethinking Economic Policy in the Age of Financialization: Why the Barro-Ricardo Theory Cannot Make Sense, <<BINZAGR INSTITUTE FOR SUSTAINABLE PROSPERITY POLICY NOTES>>, 16; 2017 (Policy Note No. 116): 1-6 [http://hdl.handle.net/10807/122956]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/122956
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