Reorienting Fiscal Policy: A Bottom Up Approach

Over 70 years of fiscal activism have not been able to address what Keynes called the two outstanding faults of society, namely our failure to produce and maintain a close approximation to full employment and to improve the income distribution in the economy. Indeed, this project argues that fiscal policy, as is currently practiced, largely undermines these two objectives. In this context, the present research addresses a foundational question: what shape and form must fiscal policy take to generate better socio-economic outcomes? The project will offer a theoretical and empirical reassessment of alternative fiscal policy actions to tease out their advantages and disadvantages and will culminate in a specific policy proposal that marries the objectives of tight full employment, better income distribution, and adequate public goods provisioning.