Fiscal and Monetary Policy Reconsidered: Comment
Abstract
Robert Eisner has recently entered the debate on the relative potency of monetary and fiscal actions. He demonstrates the ineffectiveness of the 1968 tax surcharge in checking inflation, then goes on to assert that tight money would be similarly ineffective. This paper considers Eisner's analysis as it pertains to the inadequacy of monetary policy. First, it is shown that his conclusions do not necessarily follow from his own model. Second, using parameter estimates representative of other studies, it is demonstrated that Eisner's conclusions are not substantiated by the empirical evidence.
- Sources
- openalex