Neither Northerners are willing to invest in a South they perceive as unwilling to undertake necessary structural reforms, nor are Southerners willing to invest in their countries in a climate of austerity and policy uncertainty imposed, in their view, by the North. This results in a vicious...

This chapter is a critical survey of literature on the implications of government financial policy for economic activity. The central question is whether the mode of financing of a given path of real government purchases — by taxes, non-monetary debt issue, or money creation — has real...