Capital Market Imperfection, the Consumption Function, and the Effectiveness of Fiscal Policy

1979 ◽  
Vol 93 (3) ◽  
pp. 455 ◽  
Author(s):  
Walter Perrin Heller ◽  
Ross M. Starr
Keyword(s):  
Fiscal Policy ◽  
Capital Market ◽  
Consumption Function ◽  
Market Imperfection ◽  
Capital Market Imperfection

Redistribution Policies under Capital Market Imperfection

2002 ◽  
Vol 53 (1) ◽  
pp. 94-113
Author(s):  
Masaya Sakuragawa ◽  
Sakae Mitsui
Keyword(s):  
Capital Market ◽  
Market Imperfection ◽  
Capital Market Imperfection

Capital Market "Imperfections" and the Consumption Function

1986 ◽  
Vol 88 (1) ◽  
pp. 59 ◽  
Author(s):  
Mervyn A. King
Keyword(s):  
Capital Market ◽  
Market Imperfections ◽  
Consumption Function ◽  
Capital Market Imperfections

scholarly journals How EURO shrinks democracy: Insights from the Greek crisis

2015 ◽  
Vol 4 (4) ◽  
pp. 135-146
Author(s):  
Alberto Lanzavecchia ◽  
Eugenio Pavarani ◽  
Giulio Tagliavini
Keyword(s):  
Fiscal Policy ◽  
Capital Market ◽  
Public Debt ◽  
Sovereign Debt ◽  
Unexpected Events ◽  
The Public ◽  
Greek Crisis ◽  
Loss Of Autonomy ◽  
The Government ◽  
New Framework

The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.

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