Austerity and Expansion

2020 ◽  
pp. 51-68
Author(s):  
Steven J. Ericson
Keyword(s):  
Government Spending ◽  
Korean Peninsula ◽  
Export Promotion ◽  
Financial Reform ◽  
Policy Mix ◽  
Fiscal Deficits ◽  
Economic Liberalism ◽  
Tax Revenues ◽  
Classical Economic ◽  
Public Bonds

This chapter describes the outbreak of military crises on the Korean Peninsula, the worsening of the domestic depression brought on primarily by Matsukata's own currency contraction, and other exigencies which prompted him instead to increase government spending, generating fiscal deficits that he financed not by boosting tax revenues but by promoting exports and selling public bonds. In responding to these trends through a pragmatic embrace of public bond issuance and state-led export promotion, Matsukata departed significantly from classical economic liberalism. He began turning toward such positive policies as early as 1883. In that regard, the Matsukata financial reform as it unfolded combined the contractionary program of Sano with the expansionary approach of Ōkuma. This policy mix, in turn, would help shorten a sharp, deflation-induced depression that Matsukata initially expected would continue for a year or two longer.

Financial Stabilization in Meiji Japan

2020 ◽  
Author(s):  
Steven J. Ericson
Keyword(s):  
Financial Reform ◽  
Financial Reforms ◽  
Meiji Japan ◽  
Economic Liberalism ◽  
Finance Minister ◽  
Neoliberal Reforms ◽  
Fiscal Retrenchment ◽  
The World ◽  
Classical Economic ◽  
State Responses

With a new look at the 1880s financial reforms in Japan, this book overturns widely held views of the program carried out by Finance Minister Matsukata Masayoshi. The book shows, rather than constituting an orthodox financial-stabilization program—a sort of precursor of the “neoliberal” reforms promoted by the IMF in the 1980s and 1990s—Matsukata's policies differed in significant ways from both classical economic liberalism and neoliberal orthodoxy. The Matsukata financial reform has become famous largely for the wrong reasons, and the book sets the record straight. It shows that Matsukata intended to pursue fiscal retrenchment and budget-balancing when he became finance minister in late 1881. Various exigencies, including foreign military crises and a worsening domestic depression, compelled him instead to increase spending by running deficits and floating public bonds. Though he drastically reduced the money supply, he combined the positive and contractionary policies of his immediate predecessors to pull off a program of “expansionary austerity” paralleling state responses to financial crisis elsewhere in the world both then and now. Through a new and much-needed recalibration of this pivotal financial reform, the book demonstrates that, in several ways, ranging from state-led export promotion to the creation of a government-controlled central bank, Matsukata advanced policies that were more in line with a nationalist, developmentalist approach than with a liberal economic one. It shows that Matsukata Masayoshi was far from a rigid adherent of classical economic liberalism.

Economics as Theory and Ideology

1954 ◽  
Vol 6 (3) ◽  
pp. 289-305
Author(s):  
H. van B. Cleveland
Keyword(s):  
Economic System ◽  
Economic Thought ◽  
Western World ◽  
Economic Systems ◽  
Human Society ◽  
Economic Problems ◽  
Goods And Services ◽  
Economic Liberalism ◽  
Eighteenth And Nineteenth Centuries ◽  
Classical Economic

There is not a great deal to be said about economics which is truly universal. One can say that economics is the study of economic systems. Economic systems can be defined as systems of human actions concerned with the production and the distribution of goods and services which are scarce relative to the wants of the community. But statements of this kind, which attempt to define the economic aspect of human society in universally valid terms, are far too general to serve as premises from which an economic theory, useful for understanding actual economic problems, can be logically deduced. To have theory, one must start with premises and assumptions about some particular economic system, historically given, or some particular kind of economic system. The great bodies of economic thought of the Western world—mercantilism, classical and neo-classical economic liberalism, and the various schools of Marxist economic—have been theories relevant to particular economic systems: those, let us say, of the Western world in the seventeenth, eighteenth, and nineteenth centuries.

Private Consumption, Government Spending, Debt Neutrality: Resolving Kormendi-Feldstein- Modigliani Controversy

1994 ◽  
Vol 33 (4II) ◽  
pp. 1055-1071
Author(s):  
Aqdas Ali Kazami
Keyword(s):  
Government Spending ◽  
Crowding Out ◽  
Private Capital ◽  
Ricardian Equivalence ◽  
Fiscal Deficits ◽  
Government Bonds ◽  
Private Savings ◽  
David Ricardo ◽  
Public Deficits

The debt neutrality hypothesis, in its quintessential form, postulates that debt/tax mix for fmancing deficit is irrelevant. More precisely, the debt-neutrality deals with the two fundamental questions: (i) Given the volume and composition of government expenditures, does it matter whether they are fmanced by taxes or debt issue? (ii) Do public deficits absorb private savings that otherwise fmance private capital formation? Juxtaposed to the traditional Keynesian theory which answers these questions positively, the exponents of debt-neutrality make the counter-claim that debt is neutral and public deficits have no "crowding out" effects on private saving or investment. The debt-neutrality is popularly termed as the Ricardian Equivalence Hypothesis because the fundamental logic underlying this hypothesis was originally presented by David Ricardo in Chapter XVII entitled "Taxes on Other Commodities than Raw Produce" of his celebrated "The Principles of Political Economy and Taxation". Although Ricardo explained why government borrowing and taxes could be equivalent, he never sponsored the case for unlimited issue of government bonds. In fact, he warned against the consequences of continuous fiscal deficits in the following words: "Form what I have said, it must not be inferred that I consider the system of borrowing as the best calculated to defray the extraordinary expenses.....................

A Note on the Relation between Government Expenditure and Receipts in Italy: A Quarterly Analysis

2003 ◽  
Vol 21 (1) ◽  
pp. 63-79
Author(s):  
Giovanna Tagliabue
Keyword(s):  
Government Spending ◽  
Central Government ◽  
Government Expenditure ◽  
Budget Deficits ◽  
Quarterly Data ◽  
Tax Revenues ◽  
Precise Knowledge ◽  
Short Run ◽  
The Relationship ◽  
Automatic Stabiliser

Abstract A precise knowledge of the relation between government expenditure and revenues may be useful to control budget deficits because, if there is interdependence, raising taxes to reduce deficits may lead directly to more spending. An effective manipulation of central government spending and tax revenues requires information on the direction of causality between these economic variables.The purpose of this paper is to investigate the relationship between government expenditure and receipts based on quarterly data, using the structural cointegration approach of Pesaran and Pesaran [1997]. In the results presented below, the structural cointegration approach provides evidence of a long and short-run equilibrium between government spending and receipts, supporting the assumption that the Italian Government’s expenditure is a sort of automatic stabiliser as opposed to Wagner’s Law.

For Italy in a changing world: the political apogee of Alcide De Gasperi, 1948–1954

Modern Italy ◽  
2009 ◽  
Vol 14 (4) ◽  
pp. 459-471
Author(s):  
Barbara Taverni
Keyword(s):  
Political Support ◽  
The Political ◽  
Economic Liberalism ◽  
New Interpretation ◽  
The Government ◽  
The Stability ◽  
Classical Economic ◽  
Social Catholicism ◽  
The Church

Following the political stabilisation achieved with the victory at the election in 1948 of the Christian Democrat Party, De Gasperi's leadership had to deal with new domestic and international dynamics. The government dialogue with the ‘laical’ parties did not end with the reconstruction of the identity of a nation divided by the Fascist phenomenon, nor did it solidify along the lines of an ideologically driven anti-Communist design. De Gasperi's leadership was interwoven with profound changes in the role of the Church, the economic system and political organisation, founded upon new party and government systems. The national and European dimensions influenced one another in this conjuncture, resulting in a new set of equilibria: in the stability of the executive, within the limits set by the primacy of the parliamentary institutions and the organisational role of the party as a focus for political support; in economics, with a revision of classical economic liberalism; and in a unique synthesis of the secular tradition with social Catholicism, with a new interpretation of the 1948 Constitutional model.

Spending in a time of “Retrenchment”

2020 ◽  
pp. 69-87
Author(s):  
Steven J. Ericson
Keyword(s):  
Industrial Policy ◽  
State Intervention ◽  
Institutional Setting ◽  
Free Enterprise ◽  
Economic Liberalism ◽  
State Involvement ◽  
The People ◽  
The Government ◽  
Classical Economic ◽  
Lack Of Commitment

This chapter shows how the Matsukata reform brought about a shift in industrial policy. This indicated a move away from direct state intervention in the economy and toward the creation of a favorable institutional setting for the growth of private enterprise. Yet, for all of Matsukata's free enterprise rhetoric—“the Government should never attempt to compete with the people in pursuing lines of industry or commerce”—he deviated from classical economic liberalism by increasing industrial spending in fiscal 1881–1885 compared to the previous four years and by maintaining fairly heavy state involvement in the economy. Likewise, his industrial policy contrasts with the emphasis of neoliberal IMF orthodoxy on privatization insofar as the Meiji government sold off hardly any of its enterprises until late in the Matsukata financial reform. Although, the paucity of sales until mid-1884 was a function more of the shortage of buyers than of Matsukata's lack of commitment to supporting private initiative.

scholarly journals Government Spending as a Tool for Economic Growth in the Economy of Jordan

2020 ◽  
Vol 17 ◽  
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Explanatory Variables ◽  
Tax Revenues ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
The Impact

This paper shows the impact of government spending on Jordan's economy for the period (2010 –2019), where government spending and tax revenues as percentages of GDP are explanatory variables andeconomic growth is the affected variable. This research concentrates on analyzing theoretical and empiricalliterature reviews of to show the effects of government spending on economic growth and explaining this effectin Jordan for this period using the Autoregressive distributed lag (ARDL) method in Eviews program. Thisresearch reports insignificant effects of government spending and tax revenues as percentages of GDP onJordan's economy for the period (2010 – 2019). The research concludes with a recommendation that othervariables affect the economy apart from government spending and tax revenues as percentages of GDP.

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