SOME OBSERVATIONS ON COUNTERCYCLICAL 
FISCAL POLICY AND ITS EFFECTS ON 
ECONOMIC GROWTH 
TRYGVE JAAVELMO 
l'niversitetet à Oslo - Oslo - Norge 
{NTRODUCTORY REMARKS 
A leading idea in « Post-Keynesian » economic thinking 
has been the strong emphasis on fiscal policy as a means of 
steering an economy towards full and efficient use of its resour- 
ces. But for this purpose, it is held, the policy must be 
« radical » and « unorthodox », and not of the old-fashioned, 
balanced-budget type. The line of reasoning, stated briefly, 
seems to run approximately as follows: « Orthodox » fiscal 
nolicy based on a balanced budget and relatively modest eco- 
nomic activity on the part of the state is responsible for unem- 
ployment and waste of resources during business depressions. 
The task of a good fiscal policy should be to keep effective 
demand high enough — if necessary through very large budget 
deficits — in order to maintain full employment also when 
private investment activity is low. Even more far-reaching 
is the particular ideology that often seems to accompany this 
kind of reasoning, viz. that a government actually has ful- 
filled its main obligations as an economic policy-maker if i 
adheres to a fiscal policy as described. 
Haavelmo - pag.