A GRANGER CAUSALITY APPROACH TO INVESTIGATING THE IMPACT OF FISCAL POLICY ON THE U.S. ECONOMY: 1970.I — 1990.III

This study investigates the effects of fiscal policy on the U.S. economy within the confines of causality testing framework. A unidirectional causal flow is established from nominal GNP to fiscal expenditures and deficits. Further testing of the data indicates that although fiscal policy does not affect real output, it impacts the CPI.