...against fictions and other tall tales

Sunday, 17 April 2011

The modern "financial flows" view of deficit spending

In this presentation, post-Keynesian economist Mario Seccareccia of the University of Ottawa applies the sectoral flows approach to macroeconomics to discuss the importance of fiscal policy. Some of the issues covered in the presentation were discussed in two of my earlier posts (here and here). The presentation was given last week in Bretton Woods, NH, at a conference organized by the Institute for New Economic Thinking. It's well worth the 15 minutes.

The paper submitted by Prof. Seccareccia can be found on the conference website here.

As mentioned in my earlier posts, the sectoral flows view of the economy facilitates macroeconomic analysis by showing how the receipts and outlays of each sector of the economy create a corresponding rise or fall in the sectors' net acquisition of financial assets. In the presentation, Prof. Seccareccia uses the example of the Canadian economy to show how the government surpluses of the late 1990s and early 2000s corresponded with a decrease in savings by the household sector.

h/t: Cullen Roche

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