Fiscal Policy and Business Cycles

By Alvin H. Hansen | Go to book overview
Save to active project

Chapter XII
PUMP-PRIMING AND COMPENSATORY FISCAL POLICY

MONETARY policy is an important weapon which we cannot afford to dispense with in cyclical compensatory policy. But it has severe limitations and must be supplemented with other methods. This statement must not be interpreted to mean, however, that even a complete arsenal, involving all the known weapons of attack upon the cycle, is really adequate to stabilize a private enterprise economy. While a program of positive action is necessary, and to a degree effective, complete stability is, nevertheless, unattainable.

Cyclical fiscal policy may be discussed under two headings: first, a cyclically adjusted public spending program; second, a cyclically administered tax policy.

The policy of public spending with respect to the business cycle involves a consideration of "pump-priming," in the strict sense in which that term should be used, in contrast with a policy of public compensatory spending as an offset to fluctuations in private investment. It involves, moreover, theoretical consideration of the Multiplier Principle and the Principle of Acceleration. It involves, in addition, a consideration of the types of expenditure most effective in view of the Multiplier and Acceleration principles as instruments to lift the national income, whether through pumppriming or through compensation.

It is important to make a sharp distinction between the pump-priming concept and the concept of compensation.

-261-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Fiscal Policy and Business Cycles
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 466

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?