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Exact(17)
The deterioration in the trade balance offsets whatever expansionary effect the fiscal policy might have had.
Steps taken to increase government spending by public works have a similar expansionary effect.
But it will limit the magnitude of the expansionary effect, not turn it into contraction.
In 2009 and 2010 this austerity offset much of the expansionary effect of federal-government stimulus.
Why wouldn't it just drive down the dollar, and thereby have an expansionary effect?
And this would actually have an expansionary effect on the U.S. economy.
Similar(43)
Now, the Fed's role will limit the expansionary effects of the deficit.
One caustic critic referred to claims about the expansionary effects of austerity as amounting to belief in the "confidence fairy".
It is by no means uncommon to find that the expansionary effects predominate, and many economists consider this to be the normal outcome.
According to the expectations channel, a fiscal consolidation may give rise to less contractionary, or even expansionary effects on consumption, despite a decline in current disposable income.
But such requirements may do little more than offset the expansionary effects of the central bank's purchases of foreign exchange, made necessary by its stubborn refusal to allow the yuan to strengthen faster.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com