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- Title
THE STRUCTURE OF FISCAL MODELS.
- Authors
Cornwall, John
- Abstract
This article argues that contracyclical models are not really discretionary contracyclical policies but are closely related to built-in stabilization policies. Several writers have alleged that contracyclical policy can be destabilizing in the sense of either increasing the amplitude of cycles or their frequency or both compared with a do-nothing policy. Most of the examples are variations of two models or policies originally developed by Phillips; the Proportional Stabilization Policy and the Derivative Stabilization Policy. The supply-determined model-builders have raised certain questions about the mathematical properties of models that are important and should be considered. Aside from such basic things as the completeness and specification of the models and the existence and uniqueness of a solution, there is the very important question of stability. All three examples of supply-determined models have focused attention in one way or another on the stability problem. Even if it cannot be assumed that structural changes are absent and that things like wars are unimportant, it can be argued that it is important that any model, short- or long-run, be subject to some sort of stability test. The more realistic the model the more important are the mathematical properties of a fixed parameter model.
- Subjects
ECONOMIC models; ECONOMIC stabilization; SUPPLY &; demand; MATHEMATICS; ECONOMICS
- Publication
Quarterly Journal of Economics, 1965, Vol 79, Issue 4, p608
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1880654