Arbeitspapier

Public debt in the "new normal": A Schumpeterian perspective on fiscal policy

This paper shows that important insights for fiscal policy can be derived from Joseph Schumpeter's academic work. This concerns his fundamental distinction between theories in which the monetary sphere is identical with the real sphere ("real analysis"), and theories in which financial sphere is independent of the real sphere. From the "monetary analysis" propagated by Schumpeter follows that the financing of government investment does not depend on household saving. Thus, Schumpeter's growth theory shows that credit-financed investment, which leads to an innovative use of existing resources, plays a decisive role in economic development. For fiscal policy, this results in the model of the "entrepreneurial state" (Mazzucato) as an engine for future investment. This model goes far beyond the narrow portrayal of government debt in "real analysis" of the neoclassical theory, which assigns the state merely the role of a capital destroyer. But it also offers a broader perspective than that of monetary Keynesian theory, including MMT, in which government debt is seen to serve only to produce full employment (but not beyond). Schumpeter's rejection of the concept of a purely goods-based real interest rate is also innovative. It provides the basis for the strategy of "yield curve control," in which the long-term interest rate is directly controlled by the central bank so that the sustainability of government debt is not determined by capital markets.

Sprache
Englisch

Erschienen in
Series: IMK Working Paper ; No. 215

Klassifikation
Wirtschaft
Macroeconomics and Monetary Economics: General
Fiscal Policy
Thema
fiscal policy
public debt
monetary economics
economic growth
full employment

Ereignis
Geistige Schöpfung
(wer)
Bofinger, Peter
Ereignis
Veröffentlichung
(wer)
Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)
(wo)
Düsseldorf
(wann)
2022

Handle
Letzte Aktualisierung
20.09.2024, 08:22 MESZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Bofinger, Peter
  • Hans-Böckler-Stiftung, Institut für Makroökonomie und Konjunkturforschung (IMK)

Entstanden

  • 2022

Ähnliche Objekte (12)