Document Type

Article

Department or Administrative Unit

Economics

Publication Date

2006

Abstract

This study investigates the impact of fiscal policy on the U.K. economy during the 1960 - 1990 time period. The empirical analysis is conducted within the Granger causality testing methodology. Initially the causal flows between fiscal expenditures, deficits and nominal GDP are examined. A hi-directional causal flow between expenditures and nominal GDP is established while deficits and nominal GDP are found to be statistically independent. However, the main contribution of this research lies in its emphasis on analyzing the impact of fiscal expenditures on real output and prices. The results of the trivariate analysis indicate the absence of causal flows from fiscal expenditures to real GDP while the U.K. economy's prices appear to be causally affected by these expenditures.

Comments

This article was originally published in the Indian Journal of Economics & Business.

Journal

Indian Journal of Economics & Business

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