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Fiscal policy in a depressed economy : was there a ‘free lunch’ in 1930s’ Britain?
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Crafts, N. F. R. and Mills, Terence C. (2012) Fiscal policy in a depressed economy : was there a ‘free lunch’ in 1930s’ Britain? Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2012 (Number 106).
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Text (Working paper)
WRAP_106.2012_crafts.pdf - Published Version Download (1406Kb) | Preview |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
We report estimates of the fiscal multiplier for interwar Britain based on quarterly data and timeseries
econometrics. We find that the government-expenditure multiplier was in the range 0.3 to
0.9 even during the period that interest rates were at the lower bound. The scope for a ‘Keynesian
solution’to recession was much less than is generally supposed. In the later 1930s but not before
Britain’s exit from the gold standard, there was a ‘fiscal free lunch’in that deficit-financed
government spending would have improved public finances enough to pay for the interest on the
extra debt.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | D History General and Old World > DA Great Britain H Social Sciences > HB Economic Theory |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Great Britain -- Economic conditions -- 20th century, Keynesian economics, Public works -- Great Britain -- 20th century | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry, UK | ||||
Official Date: | December 2012 | ||||
Dates: |
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Volume: | Volume 2012 | ||||
Number: | Number 106 | ||||
Number of Pages: | 30 | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Date of first compliant deposit: | 1 August 2016 | ||||
Date of first compliant Open Access: | 1 August 2016 |
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