Contractionary Effects of Stabilization and Long-Run Growth

06/02/2003
Working Paper
Macroeconomics

This paper reviews models of long-run growth which assume that the economy is not on its so-called 'normal' path, and in which both aggregate demand and aggregate supply issues have a role in determining long-run growth. This review shows that contractionary stabilization policies can have adverse long-run effects on growth, and may in fact exacerbate the problems they were intended to solve.

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Contractionary Effects of Stabilization and Long-Run Growth

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