Höppner, Florian; Wesche, Katrin - 2000 - This version: July 2000
Keynesian theory suggests that a reduction in government expenditure has a negative effect on private demand and … therefore on output. Contrary, neoclassical theory argues that reduced public expenditure makes room for an expansion of the … variable reflecting the sustainability of the debt path, as theory suggests. We find that the deficit influences the transition …
