Abstract
This paper examines the impact of varying the specification of the demand for money on the size of the balanced budget multiplier. The money demand may shift autonomously following a balanced budget change in government spending if private money demand is dependent on disposable rather than total income or if, due to a lag in the government spending process, a nonzero incremental governmental money demand exists. The implications of these assumptions are determined in a pure monetary model and then in an IS-LM model. In each case the balanced budget multiplier differs from the conventional result.
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