The myth of Rubinomics

Purpose - The purpose of this paper is to analyze and understand the Rubinomics hypothesis or the argument that "fiscal discipline" will bring private investment to a growth path as a result of a decrease in real interest rates, during the 1990s in the USA.Design methodology approach - The...

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Bibliographic Details
Published in:Humanomics 2009-08, Vol.25 (3), p.204-216
Main Authors: Liard-Muriente, Carlos F, Meeropol, Michael
Format: Article
Language:English
Subjects:
Fiscal policy
Government
Hypotheses
Macroeconomics
Studies
United States of America
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Summary:Purpose - The purpose of this paper is to analyze and understand the Rubinomics hypothesis or the argument that "fiscal discipline" will bring private investment to a growth path as a result of a decrease in real interest rates, during the 1990s in the USA.Design methodology approach - The paper relies on a range of previously published works and macroeconomic data to test the Rubinomics hypothesis.Findings - The paper concludes based on data from the experience of the US economy during the 1990s that the evidence does not validate the arguments of Rubinomics.Originality value - The "crowding-out" debate is an important controversy in macroeconomics. By shedding light over this controversial issue, this paper shows that the US experience during the so-called roaring 1990s, a period of extraordinary "fiscal discipline," did not follow the classical crowding-out hypothesis.
ISSN:0828-8666
2514-9369
1758-7174
2514-9377
DOI:10.1108/08288660910986937