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Winter 2015

ISSN 0890-913X

Volume 30, Number 4

Categories: Winter 2015 | Economics

Fiscal Policy in Capital-Based Macroeconomics with Idle Resources

Adrián O. Ravier, Universidad Francisco Marroquin

Nicolás Cachanosky, Metropolitan State University of Denver

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TheJournalofPrivateEnterprise30(4),2015,81–95FiscalPolicyinCapital-BasedMacroeconomicswithIdleResourcesAdriánO.RavierUniversidadFranciscoMarroquínNicolásCachanoskyMetropolitanStateUniversityofDenver______________________________________________________AbstractWhileRogerGarrison’stimestructureofproductionmodelhasbeenmostlyusedtotheoreticallyandempiricallyanalyzebusinesscycles,otherpotentialvenueshavenotbeenexplored.Theeffectsoffiscalpolicyisoneoftheseapplications.WeshowhowGarrison’smodelcanbeusedtoanalyzetheeffectsoffiscalpolicyinthepresenceofidleresources.Thisanalysisyieldstwoimportantresults.Particularly,ourapplicationofGarrison’smodelshowsthatevenif,startingwithidleresources,fiscalpolicymanagestoreachpotentialoutput,theresultisimbalancesinresourceallocationintheeconomy’sstructureofproduction.______________________________________________________JELCodes:B53,E12,E62Keywords:capital-basedmacroeconomics,Keynesianmacroeconomics,idleresources,fiscalpolicy,crowdingouteffectI.IntroductionRogerW.Garrison(2001)developedaframeworktochallengetheeffortsofJohnM.Keynes(1936)andhisfollowers,especiallythoseboundtotheIS–LMmodel.Garrison’smaincontributiontothistypeofmacroeconomicmodelingisaddingthetimefactorwiththeaidoftheHayekiantriangletorepresenta“timestructureofproduction”(explainedlater).GarrisonfollowsHayek’sinsightinpointingoutthattherecanbeadisequilibriuminthetimestructureofproductionevenifthemacroeconomicaggregatessuggestfullemployment.Garrison’smodelismostlyusedtoillustratetheeffectsdescribedbytheAustrianbusinesscycletheory(ABCT)andto81

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Title	Fiscal Policy in Capital-Based Macroeconomics with Idle Resources
Authors/Creators:	Adrián O. Ravier, Universidad Francisco Marroquin Nicolás Cachanosky, Metropolitan State University of Denver
Year:	2015
Volume:	30
Number:	4
Pages:	81 - 95
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	capital-based macroeconomics, Keynesian macroeconomics, idle resources, fiscal policy, crowding out effect

Citation:
Ravier, Adrián O.; Cachanosky, Nicolás / 2015. "Fiscal Policy in Capital-Based Macroeconomics with Idle Resources." The Journal of Private Enterprise, 30(4): 81-95.