This book presents the first authoritative and comprehensive account of the development of the Peruvian revolution of 1968. The study resulted from a team experiment in applied political science, economics, and sociology that maintained effective communications between Peru and the United States at many levels during the difficult years following the revolution. Each chapter is the result of continuous interaction between a leading authority and the major sectors of both societies. History is here presented in its diplomatic, social, economic, and cultural context. The Peruvian and U.S. governments helped to define the subjects of greatest interest to their respective countries, and a systematic effort was made to find the leading authorities on each issue. Since one purpose of this volume is to affect policy by identifying new alternative policies, the papers included here were prepared specifically to be of value to policy makers. This book was produced by a citizens’ constituency on U.S. foreign policy under the auspices of the Adlai Stevenson Institute of International Affairs, the Chicago Council on Foreign Relations, and the Johnson Foundation.
For thirty years prominent voices have advocated a policy of starving the beast cutting taxes to force government spending cuts. This paper analyzes the macroeconomic and welfare consequences of this policy using a two-country general equilibrium model. Under several strong assumptions the policy, if fully implemented, produces domestic output and welfare gains accompanied by losses elsewhere. But negative effects can easily arise in the presence of longer policy implementation lags, utility-enhancing government spending, and productive government capital. Overall, the analysis finds no support for the idea that starving the beast is a foolproof way towards higher output and welfare.
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