| This thesis has been prompted by two major concerns, a rising trend of unemployment and the need to specify a macroeconomic model capturing economic structure, that can generate effective policy recommendations. Economic structure, which influences the allocation of resources, was taken to mean the essential characteristics and complexities of the private sector and of markets as well as the pattern of government policies and programs that affect these characteristics and complexities.;We suggest that it is analytically misleading to model government spending as a single entity. Consequently, we decomposed it into supply-enchancing expenditures, transfer payments and military spending. We also think that not only expected real wages but also non-market factors and institutional constraints and arrangements affect the determination of the labor supply. These elements can be affected by government policy. This indicates that fiscal policy extends much beyond the narrow concept to deficits and surpluses.;Five interrelated hypotheses were advanced within the framework of our theoretical perspective. These are: (1) the structure of government spending is important; (2) economic structure is significant; (3) the nature of a modern monetary economy is important; (4) the way newly created money is utilized makes a difference; and (5) the coordination of monetary and fiscal policies is significant.;Two empirical methodologies were used to test our hypotheses. First, historical analysis which involves the examination of quantitative and qualitative data in one or more economies over a particular analytical and historical horizon. Utilizing this empirical methodology three extended case studies, Meiji Japan 1868-1912, Cyprus 1974-1984, and post-1960 USA were examined. In all three cases, we found supporting evidence for our hypotheses. Second, conventional econometric techniques were utilized to test the significance of the structure of government spending, using data from the USA economy for the period 1948-1985. Our econometric results confirmed this hypothesis.;For future research government spending may be disaggregated even more. Furthermore, similar theoretical and empirical studies may be also undertaken in various countries for different time periods. Evidence from cross-cultural and cross-institutional settings may enhance our grasp of fundamentals. |
