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AuthorTitleYearJournal/ProceedingsReftypeDOI/URL
Alesina, A. and Ardagna, S. Large Changes in Fiscal Policy: Taxes versus Spending 2010 Tax Policy and the Economy, Volume 24, pp. 35-68  incollection URL 
Abstract: We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.
BibTeX:
@incollection{Alesina2010a,
  author = {Alberto Alesina and Silvia Ardagna},
  title = {Large Changes in Fiscal Policy: Taxes versus Spending},
  booktitle = {Tax Policy and the Economy, Volume 24},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2010},
  pages = {35-68},
  url = {http://www.nber.org/chapters/c11970.pdf}
}
Auerbach, A.J. and Gorodnichenko, Y. Fiscal Multipliers in Recession and Expansion 2012 Fiscal Policy after the Financial Crisis, pp. 63-98  incollection URL 
Abstract: In this paper, we estimate government purchase multipliers for a large number of OECD countries, allowing these multipliers to vary smoothly according to the state of the economy and using real-time forecast data to purge policy innovations of their predictable components. We adapt our previous methodology (Auerbach and Gorodnichenko, 2011) to use direct projections rather than the SVAR approach to estimate multipliers, to economize on degrees of freedom and to relax the assumptions on impulse response functions imposed by the SVAR method. Our findings confirm those of our earlier paper. In particular, GDP multipliers of government purchases are larger in recession, and controlling for real-time predictions of government purchases tends to increase the estimated multipliers of government purchases in recession. We also consider the responses of other key macroeconomic variables and find that these responses generally vary over the cycle as well, in a pattern consistent with the varying impact on GDP.
BibTeX:
@incollection{Auerbach2012,
  author = {Alan J. Auerbach and Yuriy Gorodnichenko},
  title = {Fiscal Multipliers in Recession and Expansion},
  booktitle = {Fiscal Policy after the Financial Crisis},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2012},
  pages = {63-98},
  url = {http://www.nber.org/chapters/c12634.pdf}
}
Baker, S.R., Bloom, N. and Davis, S.J. Has Economic Policy Uncertainty Hampered the Recovery? 2012 Government Policies and the Delayed Economic Recovery  incollection URL 
Abstract: The U.S. economy hit bottom in June 2009. Thirty months later, output growth remains sluggish and unemployment still hovers above 8%. A critical question is why. One view attributes the weak recovery, at least in part, to high levels of uncertainty about economic policy. This view entails two claims: First, that policy uncertainty is unusually high in recent years. Second, that high levels of policy uncertainty caused households and businesses to hold back significantly on spending, investment and hiring. We take a look at both claims in this article. We start by considering an index of economic policy uncertainty developed in Baker, Bloom and Davis (2012). Figure 1, which plots our index, indicates that economic policy uncertainty fluctuates strongly over time. The index shows historically high levels of economic policy uncertainty in the last four years. It reached an all-time peak in August 2011. As discussed below, we also find evidence that policy concerns account for an unusually high share of overall economic uncertainty in recent years. Moreover, short-term movements in overall economic uncertainty more closely track movements in policy-related uncertainty in the past decade than earlier. In short, our analysis provides considerable support for the first claim of the policy uncertainty view. The second claim is harder to assess because it raises difficult issues of what causes what. We do not provide a definitive analysis of the second claim. Nevertheless, our evidence suggests that policy uncertainty can damage the economy, and that high levels of policy uncertainty have been an important factor hampering the recovery. We find evidence that increases in economic policy uncertainty foreshadow declines in output, employment and investment. While we cannot say that economic policy uncertainty necessarily causes these negative developments – since many factors move together in the economy – we can say with some confidence that high levels of policy uncertai
BibTeX:
@incollection{Baker2012a,
  author = {Scott R. Baker and Nicholas Bloom and Steven J. Davis},
  title = {Has Economic Policy Uncertainty Hampered the Recovery?},
  booktitle = {Government Policies and the Delayed Economic Recovery},
  publisher = {Hoover Institution, Stanford University},
  year = {2012},
  url = {https://ideas.repec.org/h/hoo/bookch/6-3.html}
}
Beaudry, P., Galizia, D. and Portier, F. Is the Macroeconomy Locally Unstable and Why Should We Care? 2016 NBER Macroeconomics Annual 2016, Volume 31  incollection URL 
Abstract: In most modern macroeconomic models, the steady state (or balanced growth path) of the system is a local attractor, in the sense that, in the absence of shocks, the economy would converge to the steady state. In this paper, we examine whether the time series behavior of macroeconomic aggregates (especially labor market aggregates) is in fact supportive of this local-stability view of macroeconomic dynamics, or if it instead favors an alternative interpretation in which the macroeconomy may be better characterized as being locally unstable, with nonlinear deterministic forces capable of producing endogenous cyclical behavior. To do this, we extend a standard AR representation of the data to allow for smooth nonlinearities. Our main finding is that, even using a procedure that may have low power to detect local instability, the data provide intriguing support for the view that the macroeconomy may be locally unstable and involve limit-cycle forces. An interesting finding is that the degree of nonlinearity we detect in the data is small, but nevertheless enough to alter the description of macroeconomic behavior. We complete the paper with a discussion of the extent to which these two different views about the inherent dynamics of the macroeconomy may matter for policy.
BibTeX:
@incollection{Beaudry2016,
  author = {Paul Beaudry and Dana Galizia and Franck Portier},
  title = {Is the Macroeconomy Locally Unstable and Why Should We Care?},
  booktitle = {NBER Macroeconomics Annual 2016, Volume 31},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2016},
  url = {http://www.nber.org/chapters/c13772.pdf}
}
Benigno, P. and Woodford, M. Optimal Monetary and Fiscal Policy: A Linear-Quadratic Approach 2004 NBER Macroeconomics Annual 2003, Volume 18, pp. 271-364  incollection URL 
Abstract: We propose an integrated treatment of the problems of optimal monetary and fiscal policy, for an economy in which prices are sticky and the only available sources of government revenue are distorting taxes. Our linear-quadratic approach allows us to nest both conventional analyses of optimal monetary stabilization policy and analyses of optimal tax-smoothing as special cases of our more general framework. We show how a linear-quadratic policy problem can be derived which yields a correct linear approximation to the optimal policy rules from the point of view of the maximization of expected discounted utility in a dynamic stochastic general-equilibrium model. Finally, we derive targeting rules through which the monetary and fiscal authorities may implement the optimal equilibrium. JEL Classification: E52, E61, E63
BibTeX:
@incollection{Benigno2004,
  author = {Pierpaolo Benigno and Michael Woodford},
  title = {Optimal Monetary and Fiscal Policy: A Linear-Quadratic Approach},
  booktitle = {NBER Macroeconomics Annual 2003, Volume 18},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2004},
  pages = {271-364},
  url = {http://www.nber.org/chapters/c11445.pdf}
}
Benigno, P. and Woodford, M. Optimal Inflation Targeting under Alternative Fiscal Regimes 2007
Vol. 11Monetary Policy under Inflation Targeting, pp. 037-075 
incollection URL 
Abstract: Standard discussions of flexible inflation targeting as an optimal monetary policy abstract completely from the consequences of monetary policy for the government budget. But at least some of the countries now adopting inflation targeting have substantial difficulty in controlling fiscal imbalances, so that the additional strains resulting from strict control of inflation are of substantial concern, and some (notably Sims 2005) have argued that inflation targeting can even be counterproductive under some fiscal regimes. Here, therefore, we analyze welfare-maximizing monetary policy taking explicit account of the consequences of monetary policy for the government budget, and under a variety of assumptions about the nature of the fiscal regime. The paper contrasts the optimal monetary policies under three alternative assumptions about fiscal policy: (i) the case in which little distortion is required to raise additional government revenue, and the fiscal authority can be relied upon to ensure intertemporal government solvency [the implicit assumption in standard analyses]; (ii) the case in which only distorting sources of revenue exist, but distorting taxes are adjusted optimally; and (iii) the case in which tax rates cannot be expected to change in response to a change in monetary policy [the problematic case emphasized by Sims]. In both of cases (ii) and (iii), it is optimal for monetary policy to allow the inflation rate to respond to fiscal developments (and the optimal responses to other shocks are somewhat different than in the classic analysis, which assumes case (I)). Nonetheless, optimal monetary policy can still be implemented through a form of flexible inflation targeting, and it remains critical, even in the most pessimistic case (case (iii)), that inflation expectations (beyond some very short horizon) not be allowed to vary in response to shocks.
BibTeX:
@incollection{Benigno2007,
  author = {Pierpaolo Benigno and Michael Woodford},
  title = {Optimal Inflation Targeting under Alternative Fiscal Regimes},
  booktitle = {Monetary Policy under Inflation Targeting},
  publisher = {Central Bank of Chile},
  year = {2007},
  volume = {11},
  pages = {037-075},
  url = {http://si2.bcentral.cl/public/pdf/banca-central/pdf/v11/037-075.pdf}
}
Blanchard, O., Erceg, C.J. and Lindé, J. Jump-Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery? 2016 NBER Macroeconomics Annual 2016, Volume 31  incollection URL 
Abstract: We show that a fiscal expansion by the core economies of the euro area would have a large and positive impact on periphery GDP assuming that policy rates remain low for a prolonged period. Under our preferred model specification, an expansion of core government spending equal to one percent of euro area GDP would boost periphery GDP around 1 percent in a liquidity trap lasting three years, about half as large as the effect on core GDP. Accordingly, under a standard ad hoc loss function involving output and inflation gaps, increasing core spending would generate substantial welfare improvements, especially in the periphery. The benefits are considerably smaller under a utility-based welfare measure, reflecting in part that higher net exports play a material role in raising periphery GDP.
BibTeX:
@incollection{Blanchard2016,
  author = {Olivier Blanchard and Christopher J. Erceg and Jesper Lindé},
  title = {Jump-Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery?},
  booktitle = {NBER Macroeconomics Annual 2016, Volume 31},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2016},
  url = {http://www.nber.org/chapters/c13784.pdf}
}
Cogan, J.F. and Taylor, J.B. What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package 2012 Government Policies and the Delayed Economic Recovery  incollection URL 
Abstract: Much of the recent economic debate about the impact of stimulus packages has focused on the size of the crucial government purchases multiplier. But equally crucial is the size of the government purchases multiplicand--the change in government purchases of goods and services that the multiplier actually multiplies. Using new data from the Bureau of Economic Analysis and considering developments at both the federal and the state and local level, we find that the government purchases multiplicand through the 2nd quarter of 2010 has been only 2 percent of the $862 billion American Recovery and Reinvestment Act (ARRA) of 2009. This increase in government purchases has occurred mainly at the federal level. While states and localities received substantial grants under ARRA, state and local governments have not increased their purchases of goods and services. Instead they reduced borrowing and increased transfer payments. These findings explain why, regardless of the size of a government purchases multiplier, changes in government purchases have had no material effect on the growth of GDP since the time ARRA was enacted. The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package. A consideration of the counterfactual event that there had not been an ARRA supports the hypothesis that state and local government borrowing would have been higher and purchases would have been about the same in the absence of ARRA.
BibTeX:
@incollection{Cogan2012,
  author = {John F. Cogan and John B. Taylor},
  title = {What the Government Purchases Multiplier Actually Multiplied in the 2009 Stimulus Package},
  booktitle = {Government Policies and the Delayed Economic Recovery},
  publisher = {Hoover Institution, Stanford University},
  year = {2012},
  url = {http://www.hoover.org/sites/default/files/research/docs/government-purchases-multiplier-actually-multiplied-in-2009-stimulus-package-oct-2010.pdf}
}
Corsetti, G., Kuester, K. and Müller, G.J. Floats, Pegs and the Transmission of Fiscal Policy 2013
Vol. 17Fiscal Policy and Macroeconomic Performance, pp. 235-281 
incollection URL 
Abstract: According to conventional wisdom, fiscal policy is more effective under a fixed exchange rate regime than under a flexible one. In this paper we reconsider the transmission of shocks to government spending across these regimes within a standard new-Keynesian model of a small open economy. Because of the stronger emphasis on intertemporal optimization, the new-Keynesian framework requires a precise specification of fiscal and monetary policies, and their interaction, at both short and long horizons. We derive an analytical characterization of the transmission mechanism of expansionary spending policies under a peg, showing that the long-term real interest rate necessarily rises if inflation rises on impact, in response to an increase in government spending. This drives down private demand even though short-term real rates fall. As this need not be the case under floating exchange rates, the conventional wisdom needs to be qualified. Under plausible medium-term fiscal policies, government spending is not necessarily less expansionary in a floating regime.
BibTeX:
@incollection{Corsetti2013a,
  author = {Giancarlo Corsetti and Keith Kuester and Gernot J. Müller},
  title = {Floats, Pegs and the Transmission of Fiscal Policy},
  booktitle = {Fiscal Policy and Macroeconomic Performance},
  publisher = {Central Bank of Chile},
  year = {2013},
  volume = {17},
  pages = {235-281},
  url = {http://si2.bcentral.cl/public/pdf/banca-central/pdf/v17/Vol17_235_281.pdf}
}
Corsetti, G. and Müller, G.J. Multilateral Economic Cooperation and the International Transmission of Fiscal Policy 2013 Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, pp. 257-297  incollection URL 
Abstract: During the global financial crisis 2007--2009 fiscal policy was widely used as a stabilization tool. Policymakers allowed a large build-up of public debt resulting from both automatic and discretionary expansionary measures. At the same time, calls for policy coordination stressed that international spillovers of fiscal policy might be sizeable. We reconsider the case for fiscal coordination by providing new evidence on the cross-border effects of discretionary fiscal measures. We rely on a vector autoregression model as well as on a quantitative business cycle model. We find that i) large spillover effects cannot be ruled out and, in contrast to conventional wisdom, ii) financial factors rather than trade flows lie at the heart of the international transmission mechanism. We discuss the implications of these results for policy coordination when markets price sovereign default risk, and put pressure on governments for implementing budget consolidation measures.
BibTeX:
@incollection{Corsetti2013b,
  author = {Giancarlo Corsetti and Gernot J. Müller},
  title = {Multilateral Economic Cooperation and the International Transmission of Fiscal Policy},
  booktitle = {Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2013},
  pages = {257-297},
  url = {http://www.nber.org/chapters/c12593.pdf}
}
de Cos, P.H. and Ortega, E. Fiscal policy analysis 2006 The analysis of the Spanish Economy, pp. 223-249  incollection URL 
Abstract: No abstract is available for this item.
BibTeX:
@incollection{Cos2006,
  author = {Pablo Hernández de Cos and Eloísa Ortega},
  title = {Fiscal policy analysis},
  booktitle = {The analysis of the Spanish Economy},
  publisher = {Banco de España;Other publications Homepage},
  year = {2006},
  pages = {223-249},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/OtrasPublicaciones/Fich/analysis_spanish_economy.pdf#page=223}
}
Eggertsson, G.B. and Woodford, M. Optimal Monetary and Fiscal Policy in a Liquidity Trap 2006 NBER International Seminar on Macroeconomics 2004, pp. 75-144  incollection URL 
Abstract: In previous work (Eggertsson and Woodford, 2003), we characterized the optimal conduct of monetary policy when a real disturbance causes the natural rate of interest to be temporarily negative, so that the zero lower bound on nominal interest rates binds, and showed that commitment to a history-dependent policy rule can greatly increase welfare relative to the outcome under a purely forward-looking inflation target. Here we consider in addition optimal tax policy in response to such a disturbance, to determine the extent to which fiscal policy can help to mitigate the distortions resulting from the zero bound, and to consider whether a history-dependent monetary policy commitment continues to be important when fiscal policy is appropriately adjusted. We find that even in a model where complete tax smoothing would be optimal as long as the zero bound never binds, it is optimal to temporarily adjust tax rates in response to a binding zero bound; but when taxes have only a supply-side effect, the optimal policy requires that the tax rate be raised during the "trap", while committing to lower tax rates below their long-run level later. An optimal policy commitment is still history-dependent, in general, but the gains from departing from a strict inflation target are modest in the case that fiscal policy responds to the real disturbance in an appropriate way.
BibTeX:
@incollection{Eggertsson2006,
  author = {Gauti B. Eggertsson and Michael Woodford},
  title = {Optimal Monetary and Fiscal Policy in a Liquidity Trap},
  booktitle = {NBER International Seminar on Macroeconomics 2004},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2006},
  pages = {75-144},
  url = {http://www.nber.org/chapters/c0076.pdf}
}
Erceg, C.J. and Lindé, J. Asymmetric Shocks in a Currency Union with Monetary and Fiscal Handcuffs 2010 NBER International Seminar on Macroeconomics 2010, pp. 95-135  incollection URL 
Abstract: This paper investigates the impact of the asymmetric shocks within a currency union in a framework that takes account of the zero bound constraint on policy rates, and also allows for constraints on fiscal policy. In this environment, we document that the usual optimal currency argument showing that the effects of shocks are mitigated to the extent that they are common across member states can be reversed. Countries can be worse off when their neighbors experience similar shocks, including policy-driven reductions in government spending.
BibTeX:
@incollection{Erceg2010,
  author = {Christopher J. Erceg and Jesper Lindé},
  title = {Asymmetric Shocks in a Currency Union with Monetary and Fiscal Handcuffs},
  booktitle = {NBER International Seminar on Macroeconomics 2010},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2010},
  pages = {95-135},
  url = {http://www.nber.org/chapters/c12213.pdf}
}
Giavazzi, F. and Pagano, M. Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries 1990 NBER Macroeconomics Annual 1990, Volume 5, pp. 75-122  incollection URL 
Abstract: According to conventional wisdom, a fiscal consolidation is likely to contract real aggregate demand. It has often been argued, however, that this conclusion is misleading as it neglects the role of expectations of future policy: if the fiscal consolidation is read by the private sector as a signal that the share of government spending in GDP is being permanently reduced, households will revise upwards their estimate of their permanent income, and will raise current and planned consumption. Only the empirical evidence can sort out which of these two contending views about fiscal policy is more appropriate -- i.e how often the contractionary effect of a fiscal consolidation prevails on its expansionary expectational effect. This paper brings new evidence to bear on this issue drawing on the European exercise in fiscal rectitude of the 1980s, and focusing, in particulars on its two most extreme cases -- Denmark and Ireland. We find that at least in the experience of these two countries the expectations' view has a serious claim to empirical relevance.
BibTeX:
@incollection{Giavazzi1990,
  author = {Francesco Giavazzi and Marco Pagano},
  title = {Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries},
  booktitle = {NBER Macroeconomics Annual 1990, Volume 5},
  publisher = {National Bureau of Economic Research, Inc},
  year = {1990},
  pages = {75-122},
  url = {http://www.nber.org/chapters/c10973.pdf}
}
Mertens, K. and Ravn, M.O. Technology-Hours Redux: Tax Changes and the Measurement of Technology Shocks 2010 NBER International Seminar on Macroeconomics 2010, pp. 41-76  incollection URL 
Abstract: A number of empirical studies find that permanent technological improvements give rise to a temporary drop in hours worked. This finding seriously questions the technology-driven business cycle hypothesis. In this paper we argue that it is important to control for permanent changes in taxes, which invalidate the standard long run identifying assumptions for technology shocks and induce low frequency fluctuations in hours worked. Using the narrative data of Romer and Romer (2010), we find that tax shocks have significant long run effects on aggregate hours, output and labor productivity. We also find that, after controlling for tax shocks, permanent shocks to labor productivity generate short run increases in hours worked and are an important source of fluctuations in US output.
BibTeX:
@incollection{Mertens2010a,
  author = {Karel Mertens and Morten O. Ravn},
  title = {Technology-Hours Redux: Tax Changes and the Measurement of Technology Shocks},
  booktitle = {NBER International Seminar on Macroeconomics 2010},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2010},
  pages = {41-76},
  url = {http://www.nber.org/chapters/c12195.pdf}
}
Perotti, R. In Search of the Transmission Mechanism of Fiscal Policy 2008 NBER Macroeconomics Annual 2007, Volume 22, pp. 169-226  incollection URL 
Abstract: Most economists would agree that a hike in the federal funds rate will cause some slowdown in growth and inflation, and that the bulk of the empirical evidence is consistent with this statement. But perfectly reasonable economists can and do disagree even on the basic effects of a shock to government spending on goods and services: neoclassical models predict that private consumption and the real wage will fall, while some neo-keyenesian models predict the opposite. This paper discusses alternative time series methodologies to identify government spending shocks and to estimate their effects. Applying these methodologies to data from the US and three other OECD countries provides little evidence in favor of the neoclassical predictions. Using the US input-output tables, the paper then turns to industry-level evidence around two major military buildups to shed light on the effects of government spending shocks.
BibTeX:
@incollection{Perotti2008,
  author = {Roberto Perotti},
  title = {In Search of the Transmission Mechanism of Fiscal Policy},
  booktitle = {NBER Macroeconomics Annual 2007, Volume 22},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2008},
  pages = {169-226},
  url = {http://www.nber.org/chapters/c4084.pdf}
}
Perotti, R. The "Austerity Myth": Gain without Pain? 2012 Fiscal Policy after the Financial Crisis, pp. 307-354  incollection URL 
Abstract: As governments around the world contemplate slashing budget deficits, the "expansionary fiscal consolidation hypothesis" is back in vogue. I argue that, as a statement about the short run, it should be taken with caution. I present four detailed case studies, two - Denmark and Ireland - undertaken under fixed exchange rates (the most relevant case for many Eurozone countries today) and two - Finland and Sweden - after floating the currency. All four episodes were associated with an expansion; but only in Denmark the driver of growth was internal demand. However, after three years a long slump set in as the economy lost competitiveness. In all the others for a long time the main driver of growth was exports. In Ireland this occurred because the sterling coincidentally appreciated. In Finland and Sweden the currency experienced an extremely large depreciation after floating. In all consolidations interest rate fell fast, and wage moderation played a key role in generating a gain competitiveness and a decline in interest rates. These results cast doubt on at least some versions of the "expansionary fiscal consolidations" hypothesis.
BibTeX:
@incollection{Perotti2012,
  author = {Roberto Perotti},
  title = {The "Austerity Myth": Gain without Pain?},
  booktitle = {Fiscal Policy after the Financial Crisis},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2012},
  pages = {307-354},
  url = {http://www.nber.org/chapters/c12652.pdf}
}
Reinhart, C.M. and Rogoff, K.S. A Decade of Debt 2014
Vol. 18Capital Mobility and Monetary Policy, pp. 97-135 
incollection URL 
Abstract: This paper presents evidence that public debts in the advanced economies have surged in recent years to levels not recorded since the end of World War II, surpassing the heights reached during the First World War and the Great Depression. At the same time, private debt levels, particularly those of financial institutions and households, are in uncharted territory and are (in varying degrees) a contingent liability of the public sector in many countries. Historically, high leverage episodes have been associated with slower economic growth and a higher incidence of default or, more generally, restructuring of public and private debts. A more subtle form of debt restructuring in the guise of "financial repression" (which had its heyday during the tightly regulated Bretton Woods system) also importantly facilitated sharper and more rapid debt reduction than would have otherwise been the case from the late 1940s to the 1970s. It is conjectured here that the pressing needs of governments to reduce debt rollover risks and curb rising interest expenditures in light of the substantial debt overhang (combined with the widespread "official aversion" to explicit restructuring) are leading to a revival of financial repression--including more directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, and tighter regulation on cross-border capital movements.
BibTeX:
@incollection{Reinhart2014,
  author = {Carmen M. Reinhart and Kenneth S. Rogoff},
  title = {A Decade of Debt},
  booktitle = {Capital Mobility and Monetary Policy},
  publisher = {Central Bank of Chile},
  year = {2014},
  volume = {18},
  pages = {97-135},
  url = {http://si2.bcentral.cl/public/pdf/banca-central/pdf/v18/Vol18_97_135.pdf}
}
Baxter, M. and King, R.G. Fiscal Externalities and Optimal Taxation in an Economic Community 2005 NBER International Seminar on Macroeconomics 2005, pp. 207-250  incollection URL 
Abstract: No abstract is available for this item.
BibTeX:
@incollection{RePEc:nbr:nberch:0346,
  author = {Marianne Baxter and Robert G. King},
  title = {Fiscal Externalities and Optimal Taxation in an Economic Community},
  booktitle = {NBER International Seminar on Macroeconomics 2005},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2005},
  pages = {207-250},
  url = {http://www.nber.org/chapters/c0346.pdf}
}
Christiano, L.J., Eichenbaum, M. and Vigfusson, R. Assessing Structural VARs 2007 NBER Macroeconomics Annual 2006, Volume 21, pp. 1-106  incollection URL 
Abstract: This paper analyzes the quality of VAR-based procedures for estimating the response of the economy to a shock. We focus on two key issues. First, do VAR-based confidence intervals accurately reflect the actual degree of sampling uncertainty associated with impulse response functions? Second, what is the size of bias relative to confidence intervals, and how do coverage rates of confidence intervals compare with their nominal size? We address these questions using data generated from a series of estimated dynamic, stochastic general equilibrium models. We organize most of our analysis around a particular question that has attracted a great deal of attention in the literature: How do hours worked respond to an identified shock? In all of our examples, as long as the variance in hours worked due to a given shock is above the remarkably low number of 1 percent, structural VARs perform well. This finding is true regardless of whether identification is based on short-run or long-run restrictions. Confidence intervals are wider in the case of long-run restrictions. Even so, long-run identified VARs can be useful for discriminating among competing economic models.
BibTeX:
@incollection{RePEc:nbr:nberch:11177,
  author = {Lawrence J. Christiano and Martin Eichenbaum and Robert Vigfusson},
  title = {Assessing Structural VARs},
  booktitle = {NBER Macroeconomics Annual 2006, Volume 21},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2007},
  pages = {1-106},
  url = {http://www.nber.org/chapters/c11177.pdf}
}
Fatás, A. and Mihov, I. The Euro and Fiscal Policy 2010 Europe and the Euro, pp. 287-324  incollection URL 
Abstract: The paper provides and empirical characterization of fiscal policy in the euro area and in a group of twenty-two OECD economies over the period from 1970 until 2007. Using the cyclically-adjusted fiscal balance we document that policy in the euro area has been mildly pro-cyclical. The adoption of the common currency and the constraints imposed by the Stability and Growth Pact have not had a large impact on the cyclical behavior of the structural balance. In contrast, over the past ten years US fiscal policy has become highly countercyclical, which was due predominantly to discretionary changes in tax policies. However, the component of the budget due to automatic stabilizers reacts stronger in the euro-area countries than in the US. We also document the primary balance in the OECD economies is more sensitive to output growth rather than to the output gap, which calls into question the common practice of adjusting structural balances by using elasticities with respect to the output gap.
BibTeX:
@incollection{RePEc:nbr:nberch:11656,
  author = {Antonio Fatás and Ilian Mihov},
  title = {The Euro and Fiscal Policy},
  booktitle = {Europe and the Euro},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2010},
  pages = {287-324},
  url = {http://www.nber.org/chapters/c11656.pdf}
}
Alesina, A. and Giavazzi, F. Introduction to "Fiscal Policy after the Financial Crisis" 2012 Fiscal Policy after the Financial Crisis, pp. 1-18  incollection URL 
Abstract: No abstract is available for this item.
BibTeX:
@incollection{RePEc:nbr:nberch:12631,
  author = {Alberto Alesina and Francesco Giavazzi},
  title = {Introduction to "Fiscal Policy after the Financial Crisis"},
  booktitle = {Fiscal Policy after the Financial Crisis},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2012},
  pages = {1-18},
  url = {http://www.nber.org/chapters/c12631.pdf}
}
Leeper, E.M. and Walker, T.B. Perceptions and Misperceptions of Fiscal Inflation 2012 Fiscal Policy after the Financial Crisis, pp. 255-299  incollection URL 
Abstract: The Great Recession and worldwide financial crisis have exploded fiscal imbalances and brought fiscal policy and inflation to the forefront of policy concerns. Those concerns will only grow as aging populations increase demands on government expenditures in coming decades. It is widely perceived that fiscal policy is inflationary if and only if it leads the central bank to print new currency to monetize deficits. Monetization can be inflationary. But it is a misperception that this is the only channel for fiscal inflations. Nominal bonds, the predominant form of government debt in advanced economies, derive their value from expected future nominal primary surpluses and money creation; changes in the price level can align the market value of debt to its expected real backing. This introduces a fresh channel, not requiring explicit monetization, through which fiscal deficits directly affect inflation. The paper describes various ways in which fiscal policy can directly affect inflation and explains why these fiscal effects are difficult to detect in time series data.
BibTeX:
@incollection{RePEc:nbr:nberch:12644,
  author = {Eric M. Leeper and Todd B. Walker},
  title = {Perceptions and Misperceptions of Fiscal Inflation},
  booktitle = {Fiscal Policy after the Financial Crisis},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2012},
  pages = {255-299},
  url = {http://www.nber.org/chapters/c12644.pdf}
}
Romer, D. What are the Costs of Excessive Deficits? 1988 NBER Macroeconomics Annual 1988, Volume 3, pp. 63-110  incollection URL 
Abstract: No abstract is available for this item.
BibTeX:
@incollection{Romer1988,
  author = {David Romer},
  title = {What are the Costs of Excessive Deficits?},
  booktitle = {NBER Macroeconomics Annual 1988, Volume 3},
  publisher = {National Bureau of Economic Research, Inc},
  year = {1988},
  pages = {63-110},
  url = {http://www.nber.org/chapters/c10952.pdf}
}
Romer, D. What Have We Learned about Fiscal Policy from the Crisis? 2012
Vol. 1In the Wake of the Crisis: Leading Economists Reassess Economic Policy, pp. 57-66 
incollection URL 
Abstract: No abstract is available for this item.
BibTeX:
@incollection{Romer2012,
  author = {Romer, David},
  title = {What Have We Learned about Fiscal Policy from the Crisis?},
  booktitle = {In the Wake of the Crisis: Leading Economists Reassess Economic Policy},
  publisher = {The MIT Press},
  year = {2012},
  volume = {1},
  pages = {57-66},
  url = {http://mitpress.mit.edu/}
}
Schmitt-Grohé, S. and Uribe, M. Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model 2006 NBER Macroeconomics Annual 2005, Volume 20, pp. 383-462  incollection URL 
Abstract: In this paper, we study Ramsey-optimal fiscal and monetary policy in a mediumscale model of the U.S. business cycle. The model features a rich array of real and nominal rigidities that have been identified in the recent empirical literature as salient in explaining observed aggregate fluctuations. The main result of the paper is that price stability appears to be a central goal of optimal monetary policy. The optimal rate of inflation under an income tax regime is half a percent per year with a volatility of 1.1 percent. This result is surprising given that the model features a number of frictions that in isolation would call for a volatile rate of inflation - particularly nonstate-contingent nominal public debt, no lump-sum taxes, and sticky wages. Under an income-tax regime, the optimal income tax rate is quite stable, with a mean of 30 percent and a standard deviation of 1.1 percent. JEL Classification: E52, E61, E63
BibTeX:
@incollection{Schmitt-Grohe2006,
  author = {Stephanie Schmitt-Grohé and Martín Uribe},
  title = {Optimal Fiscal and Monetary Policy in a Medium-Scale Macroeconomic Model},
  booktitle = {NBER Macroeconomics Annual 2005, Volume 20},
  publisher = {National Bureau of Economic Research, Inc},
  year = {2006},
  pages = {383-462},
  url = {http://www.nber.org/chapters/c0074.pdf}
}
Agnello, L., Altiparmakov, N., Andrle, M., Attinasi, M.G., Babecký, J., Barrios, S., Bluedorn, J., Borgy, V., Bouabdallah, O., Brandsma, A., Brender, A. and Vít Beyond the austerity dispute: new priorities for fiscal policy 2016 (20)School: Bank of Italy, Economic Research and International Relations Area  techreport URL 
Abstract: The workshop aimed at moving forward the fiscal policy debate, which in the crisis years was unavoidably focused on how to regain fiscal credibility and to implement sizable and fast consolidation plans. Four main themes have been proposed for the debate during the workshop. First, the two-way link between fiscal consolidation and inequality, with the idea that consolidation efforts cannot be successful in the long run if they entail a socially unsustainable increase in inequality. Second, the importance of preserving, even in contexts in which the fiscal policy stance is necessarily restrictive, growth-enhancing public investments. Third, the challenges posed to fiscal management by a low inflation context, taking into account that a subdued price dynamics not only makes the real burden of debt heavier, but it also has subtle effects, at least in the short term, on several budgetary items. Finally, the need for a simpler and more appropriate set of rules for the governance of the EMU. The latter topic was also the object of the high-level panel at the end of the workshop. While differences in emphasis emerged among the panellists, they agreed that the current framework could be streamlined, and - more importantly - that no set of rules can work if trust and a sense of sharing a common objective is not rebuilt among the Member States.
BibTeX:
@techreport{Agnello2016,
  author = {Luca Agnello and Nikola Altiparmakov and Michal Andrle and Maria Grazia Attinasi and Jan Babecký and Salvador Barrios and John Bluedorn and Vladimir Borgy and Othman Bouabdallah and Andries Brandsma and Adi Brender and Vít},
  title = {Beyond the austerity dispute: new priorities for fiscal policy},
  school = {Bank of Italy, Economic Research and International Relations Area},
  year = {2016},
  number = {20},
  url = {http://www.bancaditalia.it/pubblicazioni/altri-atti-convegni/2015-beyond-austerity/index.html}
}
Alesina, A. and Perotti, R. Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects 1996 (5730)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This ppaer studies how the composition of fiscal adjustments influences their likelihood of success, defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary. On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary. We discuss alternate explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies: Denmark, Ireland and Italy.
BibTeX:
@techreport{Alesina1996,
  author = {Alberto Alesina and Roberto Perotti},
  title = {Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects},
  school = {National Bureau of Economic Research, Inc},
  year = {1996},
  number = {5730},
  url = {http://www.nber.org/papers/w5730.pdf}
}
Alesina, A.F. and Ardagna, S. The design of fiscal adjustments 2012 (18423)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper offers three results. First, in line with the previous literature, we confirm that fiscal adjustments based mostly on the spending side are less likely to be reversed. Second, spending based fiscal adjustments have caused smaller recessions than tax based fiscal adjustments. Finally, certain combinations of policies have made it possible for spending based fiscal adjustments to be associated with growth in the economy even on impact rather than with a recession. Thus, expansionary fiscal adjustments are possible.
BibTeX:
@techreport{Alesina2012,
  author = {Alberto F. Alesina and Silvia Ardagna},
  title = {The design of fiscal adjustments},
  school = {National Bureau of Economic Research, Inc},
  year = {2012},
  number = {18423},
  url = {http://www.nber.org/papers/w18423.pdf}
}
Anaya, P. and Pienkowski, A. What Really Drives Public Debt; A Holistic Approach 2015 (15/137)School: International Monetary Fund  techreport URL 
Abstract: This paper presents a novel approach to detail the propagation of shocks to public debt. The modeling technique involves a structural vector auto-regression (SVAR) estimator with an endogenous debt accumulation equation. It explores how the main drivers of sovereign debt dynamics - the primary balance, the interest rate, growth and inflation - interact with each other. Such analysis is particularly useful for debt sustainability analysis. We find that some interactions exacerbate the impact of shocks to the accumulation of debt, while others act to stabilize debt dynamics. Furthermore, the choice of monetary policy regime plays an important role in these debt dynamics - countries with constrained monetary policy are more at risk from changes in market sentiment and must rely much more on fiscal policy to constrain debt.
BibTeX:
@techreport{Anaya2015,
  author = {Pablo Anaya and Alex Pienkowski},
  title = {What Really Drives Public Debt; A Holistic Approach},
  school = {International Monetary Fund},
  year = {2015},
  number = {15/137},
  url = {http://www.imf.org/external/pubs/ft/wp/2015/wp15137.pdf}
}
Anderson, B. and Minarik, J.J. Design Choices for Fiscal Policy Rules 2006
Vol. 5School: OECD 
techreport URL 
Abstract: This article discusses issues regarding budget process rules in the context of the current pattern of rising fiscal deficits. It begins by explaining the premise that budget process rules have multiple objectives, and so must be judged according to multiple criteria. Prominent among those criteria, given the apparent economic sluggishness of the early years of the 1990s and the resulting fiscal deficits, are how any particular set of rules might facilitate economic recovery and growth, but also maintain fiscal responsibility and public credibility.
BibTeX:
@techreport{Anderson2006,
  author = {Barry Anderson and Joseph J. Minarik},
  title = {Design Choices for Fiscal Policy Rules},
  school = {OECD},
  year = {2006},
  volume = {5},
  url = {http://www.oecd-ilibrary.org/governance/design-choices-for-fiscal-policy-rules_budget-v5-art25-en}
}
Andrle, M., Bluedorn, J.C., Eyraud, L., Kinda, T., Brooks, P.K., Schwartz, G. and Weber, A. Reforming Fiscal Governance in the European Union 2015 (15/9)School: International Monetary Fund  techreport URL 
Abstract: Successive reforms have brought many positive elements to the European Union’s fiscal framework. But they have also increased its complexity. The current system involves an intricate set of fiscal constraints, which hampers effective monitoring and public communication. Compliance has also been weak. This note discusses medium-term reform options to simplify the framework and improve compliance. Based on model simulations and practical considerations, it argues for moving to a two-pillar approach, with a single fiscal anchor (public debt-to-GDP) and a single operational target (an expenditure growth rule, possibly with an explicit debt correction mechanism) linked to the anchor.
BibTeX:
@techreport{Andrle2015,
  author = {Michal Andrle and John C Bluedorn and Luc Eyraud and Tidiane Kinda and Petya Koeva Brooks and Gerd Schwartz and Anke Weber},
  title = {Reforming Fiscal Governance in the European Union},
  school = {International Monetary Fund},
  year = {2015},
  number = {15/9},
  url = {http://www.imf.org/external/pubs/ft/sdn/2015/sdn1509.pdf}
}
Ardagna, S. and Alesina, A. Tales of Fiscal Adjustment 1998 (2579822)School: Harvard University Department of Economics  techreport URL 
Abstract: This paper examines the evidence on fiscal adjustments in OECD countries from the early 1960s to today. The results shed light on the recently observed phenomenon of fiscal tightening that produces (non-Keynesian) expansionary effects. One interpretation is that a serious fiscal tightening increases demand Wealth rises when future tax burdens decline, and when interest rates decline credibility is restored and inflation or default risks abate. Both consumption and investment rise. For this effect to produce an expansion, the tightening must be sizeable and occur after a period of stress when the budget is quickly deteriorating and public debt is building up. Another interpretation emphasizes the supply side. Typically, a fiscal consolidation based on tax increases is short-lived. To be long lasting, it must include cuts in public employment, transfers and government wages. lo be politically possible, such a policy must be supported by trade unions. These measures result in more efficient labour markets and boost the supply side. Based both on statistical evidence and on a detailed analysis often cares of major fiscal adjustment, this article provides cautious support to the supply-side view, without denying a more limited role for the demand-side channel.
BibTeX:
@techreport{Ardagna1998,
  author = {Ardagna, Silvia and Alesina, Alberto},
  title = {Tales of Fiscal Adjustment},
  school = {Harvard University Department of Economics},
  year = {1998},
  number = {2579822},
  url = {http://dash.harvard.edu/bitstream/handle/1/2579822/Ardagna_TalesFiscal.pdf}
}
Ardagna, S. Fiscal Policy in Unionized Labor Markets 2007 (2580048)School: Harvard University Department of Economics  techreport URL 
Abstract: This paper investigates the effects of fiscal policy on economic activity, public finances, welfare, and income distribution in a dynamic general equilibrium model with a unionized labor market. The paper shows that debt-financed increases of public employment, wages of public sector employees, unemployment benefits, and labor taxes put pressure on unions’ wage claims, leading to higher private sector wages, lower employment, capital, and output. In addition, increases of public employment, public wages and unemployment benefits increase workers’ utility relative to the pre-policy change equilibrium during the transition, but not in the long-run. Instead, workers’ utility decreases at any time horizon when labor taxes increase. Capitalists always benefit from increases in taxes on labor but their welfare decreases when public spending goes up. Finally, the paper investigates the extent to which the way the government balances its budget affects these results.
BibTeX:
@techreport{Ardagna2007a,
  author = {Ardagna, Silvia},
  title = {Fiscal Policy in Unionized Labor Markets},
  school = {Harvard University Department of Economics},
  year = {2007},
  number = {2580048},
  url = {http://dash.harvard.edu/bitstream/handle/1/2580048/Ardagna_FiscalPolicy.pdf}
}
Attinasi, M.-G. and Klemm, A. The growth impact of discretionary fiscal policy measures 2014 (1697)School: European Central Bank  techreport URL 
Abstract: This paper looks at the impact of discretionary fiscal policy on economic growth for a sample of 18 EU countries over the period 1998-2011. The main novelty of this paper is the use, on the revenue side, of a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations, such as changes in cyclically-adjusted variables. Using static and dynamic panel data techniques, we find that fiscal consolidation can be a drag on economic growth in the short-term, although some specific budget categories are not found to be statistically significant. In general, the results also indicate that expenditure-based adjustment tends to be less harmful than revenue-based adjustment. Among expenditure cuts, reductions in government investment and consumption are found to be growth reducing. Among revenues, indirect tax increases are found to have a particularly strong negative impact. Dynamic specifications suggest that consolidation reduces growth mainly in the year of fiscal adjustment, while future growth rates are affected only through the usual time persistence. Nonlinear specifications indicate that spreading out consolidation reduces the negative impact on growth, but only very slightly and in the absence of financial market pressures and/or fiscal sustainability considerations. Additionally, front-loading fiscal consolidation appears to be less detrimental for growth when it is based on expenditure cuts rather than tax increases JEL Classification: H20, H30, H50, C33
BibTeX:
@techreport{Attinasi2014,
  author = {Attinasi, Maria-Grazia and Klemm, Alexander},
  title = {The growth impact of discretionary fiscal policy measures},
  school = {European Central Bank},
  year = {2014},
  number = {1697},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1697.pdf}
}
Auerbach, A.J. Is there a role for discretionary fiscal policy? 2002 Proceedings - Economic Policy Symposium - Jackson Hole, pp. 109-150School: Federal Reserve Bank of Kansas City  techreport URL 
Abstract: This paper reviews the state of discretionary fiscal policy. Among its findings are: (1) In recent years, U.S. discretionary fiscal policy appears to have become more active in response to both cyclical conditions and a simple measure of budget balance. (2) Considerable uncertainty remains about how large an impact discretionary fiscal policy has on output. (3) There is little evidence that discretionary fiscal policy has played an important stabilization role during recent decades. (4) Budgetary pressure may weaken the efficacy of expansionary fiscal policy. Conversely, contractionary fiscal policy might have a salutary effect on output. This possibility may be relevant for understanding the impact of fiscal policy in the 1990s, although the mechanism is unclear. (5) The automatic stabilizers embedded in the fiscal system have experienced little net change since the 1960s and have contributed to cushioning cyclical fluctuations. But the tax system has many attributes that weaken its potential role as an automatic stabilizer, particularly with respect to investment. (6) The government's reported fiscal position, to which fiscal policy appears responsive, represents a very poor measure of underlying fiscal balance.
BibTeX:
@techreport{Auerbach2002,
  author = {Alan J. Auerbach},
  title = {Is there a role for discretionary fiscal policy?},
  journal = {Proceedings - Economic Policy Symposium - Jackson Hole},
  school = {Federal Reserve Bank of Kansas City},
  year = {2002},
  pages = {109-150},
  url = {https://www.kansascityfed.org/Publicat/sympos/2002/pdf/S02auerbach.pdf}
}
Auerbach, A.J. and Gorodnichenko, Y. Fiscal Multipliers in Japan 2014 (19911)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: In this paper, we estimate government purchase multipliers for Japan, following the approach used previously for a panel of OECD countries (Auerbach and Gorodnichenko, 2013). This approach allows multipliers to vary smoothly according to the state of the economy and uses real-time forecast data to purge policy innovations of their predictable components. For a sample period extending from 1960 to 2012, estimates for Japan are quite consistent with those previously estimated for the OECD as well as those estimated using a slightly different methodology for the United States (Auerbach and Gorodnichenko, 2012). However, estimates based only on more recent observations are less stable and provide weaker support for the effectiveness of government purchases at stimulating economic activity, particularly in recession, although cyclical patterns in Japan make the dating of recessions a challenge.
BibTeX:
@techreport{Auerbach2014,
  author = {Alan J. Auerbach and Yuriy Gorodnichenko},
  title = {Fiscal Multipliers in Japan},
  school = {National Bureau of Economic Research, Inc},
  year = {2014},
  number = {19911},
  url = {http://www.nber.org/papers/w19911.pdf}
}
Baker, D. The Myth of Expansionary Fiscal Austerity 2010 (2010-23)School: Center for Economic and Policy Research (CEPR)  techreport URL 
Abstract: Recently governments, economists, and international financial institutions have been debating the merits of further fiscal stimulus to combat the Great Recession versus fiscal austerity or "adjustment" - that is, higher taxes and/or lower government spending - to combat budget deficits. Some supporters of austerity have gone as far as arguing that fiscal adjustment could restore economic growth. These analyses are being touted to oppose increased stimulus to boost the economy. This paper examines the arguments for austerity and demonstrates that current economic conditions in the United States do not support the case for fiscal adjustment.
BibTeX:
@techreport{Baker2010,
  author = {Dean Baker},
  title = {The Myth of Expansionary Fiscal Austerity},
  school = {Center for Economic and Policy Research (CEPR)},
  year = {2010},
  number = {2010-23},
  url = {http://www.cepr.net/documents/publications/austerity-myth-2010-10.pdf}
}
Baker, S.R., Bloom, N., Davis, S.J. and Reenen, J.V. Economic Recovery and Policy Uncertainty 2012 (002)School: Centre for Economic Performance, LSE  techreport URL 
Abstract: Until some political mechanism creates incentives to elect moderate representatives who can reach across the ideological divide, the US seems destined to heightened levels of policy uncertainty for many years to come. Some research suggests that such uncertainty, particularly over economic policy, partly explains the sluggish nature of the recovery in America - and - according to one recent study, restoring policy uncertainty to levels that prevailed before the financial crisis would raise employment by an estimated 2.3 million over 18-24 months.
BibTeX:
@techreport{Baker2012,
  author = {Scott R. Baker and Nick Bloom and Steven J. Davis and John Van Reenen},
  title = {Economic Recovery and Policy Uncertainty},
  school = {Centre for Economic Performance, LSE},
  year = {2012},
  number = {002},
  url = {http://cep.lse.ac.uk/pubs/download/cepusa002.pdf}
}
Baker, S.R., Bloom, N. and Davis, S.J. Policy uncertainty: a new indicator 2012 (362)School: Centre for Economic Performance, LSE  techreport URL 
Abstract: The damaging impact of economic uncertainty on growth has been reasonably well studied - but what happens when there is uncertainty about economic policy-making? Nicholas Bloom and colleagues have developed a measure of this distinct kind of uncertainty, one that shows the value of restoring stability to current policy actions.
BibTeX:
@techreport{Baker2012b,
  author = {Scott R. Baker and Nicholas Bloom and Steven J. Davis},
  title = {Policy uncertainty: a new indicator},
  school = {Centre for Economic Performance, LSE},
  year = {2012},
  number = {362},
  url = {http://cep.lse.ac.uk/pubs/download/cp362.pdf}
}
Baker, S.R. and Bloom, N. Does Uncertainty Reduce Growth? Using Disasters as Natural Experiments 2013 (19475)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: A growing body of evidence suggests that uncertainty is counter cyclical, rising sharply in recessions and falling in booms. But what is the causal relationship between uncertainty and growth? To identify this we construct cross country panel data on stock market levels and volatility as proxies for the first and second moments of business conditions. We then use natural disasters, terrorist attacks and unexpected political shocks as instruments for our stock market proxies of first and second moment shocks. We find that both the first and second moments are highly significant in explaining GDP growth, with second moment shocks accounting for at least a half of the variation in growth. Variations in higher moments of stock market returns appear to have little impact on growth.
BibTeX:
@techreport{Baker2013,
  author = {Scott R. Baker and Nicholas Bloom},
  title = {Does Uncertainty Reduce Growth? Using Disasters as Natural Experiments},
  school = {National Bureau of Economic Research, Inc},
  year = {2013},
  number = {19475},
  url = {http://www.nber.org/papers/w19475.pdf}
}
Baker, S.R., Bloom, N. and Davis, S.J. Measuring Economic Policy Uncertainty 2015 (21633)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: We develop a new index of economic policy uncertainty (EPU) based on newspaper coverage frequency. Several types of evidence - including human readings of 12,000 newspaper articles - indicate that our index proxies for movements in policy-related economic uncertainty. Our US index spikes near tight presidential elections, Gulf Wars I and II, the 9/11 attacks, the failure of Lehman Brothers, the 2011 debt-ceiling dispute and other major battles over fiscal policy. Using firm-level data, we find that policy uncertainty raises stock price volatility and reduces investment and employment in policy-sensitive sectors like defense, healthcare, and infrastructure construction. At the macro level, policy uncertainty innovations foreshadow declines in investment, output, and employment in the United States and, in a panel VAR setting, for 12 major economies. Extending our US index back to 1900, EPU rose dramatically in the 1930s (from late 1931) and has drifted upwards since the 1960s.
BibTeX:
@techreport{Baker2015,
  author = {Scott R. Baker and Nicholas Bloom and Steven J. Davis},
  title = {Measuring Economic Policy Uncertainty},
  school = {National Bureau of Economic Research, Inc},
  year = {2015},
  number = {21633},
  url = {http://www.nber.org/papers/w21633.pdf}
}
Bankitalia Supplementi al bollettino statistico--Indicatori monetari e finanziari--Finanza pubblica, fabbisogno e debito 2015 Anno XXV Numero 3(3), pp. 30-15School: Banca d'Italia  techreport URL 
BibTeX:
@techreport{Bankitalia2015,
  author = {Bankitalia},
  title = {Supplementi al bollettino statistico--Indicatori monetari e finanziari--Finanza pubblica, fabbisogno e debito},
  journal = {Anno XXV Numero 3},
  school = {Banca d'Italia},
  year = {2015},
  number = {3},
  pages = {30--15},
  url = {https://www.bancaditalia.it/pubblicazioni/finanza-pubblica/2015-finanza-pubblica/suppl_3_15.pdf}
}
Barbiero, O. and Cournède, B. New Econometric Estimates of Long-term Growth Effects of Different Areas of Public Spending 2013 (1100)School: OECD Publishing  techreport URL 
Abstract: Using panel data for OECD countries, this study investigates the extent to which changes in government spending on education, health and other areas influence long-term growth. The results suggest that, if total government spending is kept unchanged, increasing expenditure on health, education and transport raises long-term GDP growth. In contrast, government spending on housing is found to weaken long-term GDP growth. The error-correction specification used allows assessing adjustment speed which, consistent with intuition, is estimated to be slow. According to the econometric results, it takes more than five years for half of the effect of a change in the structure of government spending to be reflected in longterm growth.
BibTeX:
@techreport{Barbiero2013,
  author = {Omar Barbiero and Boris Cournède},
  title = {New Econometric Estimates of Long-term Growth Effects of Different Areas of Public Spending},
  school = {OECD Publishing},
  year = {2013},
  number = {1100},
  url = {http://www.oecd-ilibrary.org/docserver/download/5k3txn15b59t.pdf?expires=1469533913&id=id&accname=guest&checksum=7D921D7BFC1BB5BEFD95412D509A980B}
}
Barnichon, R. and Matthes, C. Stimulus versus Austerity: The Asymmetric Government Spending Multiplier 2015 (10584)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: Despite intense scrutiny estimates of the government spending multiplier remain highly uncertain with values ranging from 0.5 to 2. While a fiscal consolidation is generally assumed to have the same (mirror-image) effect as a fiscal expansion, we show that relaxing this assumption is crucial to understanding the effects of fiscal policy. The government spending multiplier is substantially below 1 for fiscal expansions, but the multiplier is substantially above 1 for fiscal consolidations.
BibTeX:
@techreport{Barnichon2015,
  author = {Barnichon, R�gis and Matthes, Christian},
  title = {Stimulus versus Austerity: The Asymmetric Government Spending Multiplier},
  school = {C.E.P.R. Discussion Papers},
  year = {2015},
  number = {10584},
  url = {http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=10584}
}
Barnichon, R. and Matthes, C. Understanding the Size of the Government Spending Multiplier: It's in the Sign 2016 (DP11373)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: Despite intense scrutiny, estimates of the government spending multiplier remain highly uncertain, with values ranging from 0.5 to 2. While an increase in government spending is generally assumed to have the same (mirror-image) effect as a decrease in government spending, we show that relaxing this assumption is important to understand the effects of fiscal policy. Regardless of whether we identify government spending shocks from (i) a narrative approach, or (ii) a timing restriction, we find that the contractionary multiplier --the multiplier associated with a negative shock to government spending-- is above 1, while the expansionary multiplier --the multiplier associated with a positive shock-- is substantially below 1. The multiplier is largest in recessions, as found in previous studies, but only because the contractionary multiplier is largest in recessions. The expansionary multiplier is always below 1 and not larger in recessions. We argue that our results help understand the wide range of multiplier estimates found in the literature.
BibTeX:
@techreport{Barnichon2016,
  author = {Barnichon, R�gis and Matthes, Christian},
  title = {Understanding the Size of the Government Spending Multiplier: It's in the Sign},
  publisher = {CEPR Discussion Paper No. DP11373},
  school = {C.E.P.R. Discussion Papers},
  year = {2016},
  number = {DP11373},
  url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2807784}
}
Barrios, S., Fatica, S., Martinez, D., Mourre, G., Salman, F., Bova, E., Kolerus, C., Tapsoba, J.S., Mourre, G., Altiparmakov, N., Reiss, L. and Bosch, M. Public Finances Today: Lessons Learned and Challenges Ahead 2015 (19)School: Bank of Italy, Economic Research and International Relations Area  techreport URL 
Abstract: The volume collects the essays presented at the 16th Workshop on Public Finance organised by Banca d�Italia in Perugia from 3 to 5 April 2014. The workshop had two main objectives: (i) examining the changes that public policies should undertake in the coming years to adapt to the challenging new environment; (ii) assessing policy responses to the crisis. In many countries the recent crisis accelerated pre-existing trends and made even more urgent a rethinking of the tax and welfare systems. The workshop contributed to this reassessment offering insights on the consequences of specific reforms carried out in Europe and elsewhere. The reaction to the euro-area sovereign debt crisis included fiscal adjustments as well as institutional reforms. In the workshop, theoretical and empirical works examined timing, effectiveness and composition of the fiscal consolidations carried out, as well as the recent reform of EU governance. The first session focused on the effects of both tax and expenditure policies on tax rates, work related tax expenditures, labor markets, the overall economy and pension reforms. Budgetary adjustments were at the core of the second session. Factors conducive to a successful exit from IMF official assistance, impact of government's payment delays, propagation of government spending shocks, debt dynamics, the effects on public opinion of fiscal policy and fiscal multipliers were all given space and attention. The third session concentrated on recent changes in fiscal rules, fiscal councils and the possible establishment of an euro-area fiscal union. The panel discussion focused on the progress made and the characteristics of existing fiscal rules.
BibTeX:
@techreport{Barrios2015,
  author = {Salvador Barrios and Serena Fatica and Diego Martinez and Gilles Mourre and Ferhan Salman and Elva Bova and Christina Kolerus and Jules S. Tapsoba and Gilles Mourre and Nikola Altiparmakov and Lukas Reiss and Mariano Bosch},
  title = {Public Finances Today: Lessons Learned and Challenges Ahead},
  school = {Bank of Italy, Economic Research and International Relations Area},
  year = {2015},
  number = {19},
  url = {http://www.bancaditalia.it/pubblicazioni/collana-seminari-convegni/2015-0019/PUBLIC-FINANCES-TODAY.pdf}
}
Batini, N., Callegari, G. and Melina, G. Successful austerity in the United States, Europe and Japan 2012 School: IMF  techreport URL 
BibTeX:
@techreport{Batini2012,
  author = {Batini, Nicoletta and Callegari, Giovanni and Melina, Giovanni},
  title = {Successful austerity in the United States, Europe and Japan},
  publisher = {IMF working paper},
  school = {IMF},
  year = {2012},
  url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2169736}
}
Batini, N., Eyraud, L. and Weber, A. A Simple Method to Compute Fiscal Multipliers 2014 (14/93)School: International Monetary Fund  techreport URL 
Abstract: Fiscal multipliers are important tools for macroeconomic projections and policy design. In many countries, little is known about the size of multipliers, as data availability limits the scope for empirical research. For these countries, we propose a simple method—dubbed the "bucket approach" —to come up with reasonable multiplier estimates. The approach bunches countries into groups (or "buckets" ) with similar multiplier values, based on their characteristics. It also takes into account the effect of some temporary factors, such as the state of the business cycle.
BibTeX:
@techreport{Batini2014,
  author = {Nicoletta Batini and Luc Eyraud and Anke Weber},
  title = {A Simple Method to Compute Fiscal Multipliers},
  school = {International Monetary Fund},
  year = {2014},
  number = {14/93},
  url = {http://www.imf.org/external/pubs/ft/wp/2014/wp1493.pdf}
}
Baum, A., Poplawski-Ribeiro, M. and Weber, A. Fiscal Multipliers and the State of the Economy 2012 (12/286)School: International Monetary Fund  techreport URL 
Abstract: Only a few empirical studies have analyzed the relationship between fiscal multipliers and the underlying state of the economy. This paper investigates this link on a country-by-country basis for the G7 economies (excluding Italy). Our results show that fiscal multipliers differ across countries, calling for a tailored use of fiscal policy. Moreover, the position in the business cycle affects the impact of fiscal policy on output: on average, government spending, and revenue multipliers tend to be larger in downturns than in expansions. This asymmetry has implications for the choice between an upfront fiscal adjustment versus a more gradual approach.
BibTeX:
@techreport{Baum2012,
  author = {Anja Baum and Marcos Poplawski-Ribeiro and Anke Weber},
  title = {Fiscal Multipliers and the State of the Economy},
  school = {International Monetary Fund},
  year = {2012},
  number = {12/286},
  url = {http://www.imf.org/external/pubs/ft/wp/2012/wp12286.pdf}
}
Beetsma, R., Giuliodori, M. and Wierts, P. Budgeting versus implementing fiscal policy in the EU 2009 (7285)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: Using real-time data from Europe's Stability and Convergence Programs, we explore how fiscal plans and their implementation in the EU are determined. We find that (1) implemented budgetary adjustment falls systematically short of planned adjustment and this shortfall increases with the projection horizon, (2) variability in the eventual fiscal outcomes is dominated by the implementation errors, (3) there is a limited role for traditional political variables, (4) stock-flow adjustments are more important when plans are more ambitious, and (5), most importantly, both the ambition in fiscal plans and their implementation benefit from stronger national fiscal institutions. We emphasise also the importance of credible plans for the eventual fiscal outcomes.
BibTeX:
@techreport{Beetsma2009,
  author = {Beetsma, Roel and Giuliodori, Massimo and Wierts, Peter},
  title = {Budgeting versus implementing fiscal policy in the EU},
  school = {C.E.P.R. Discussion Papers},
  year = {2009},
  number = {7285},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=7285}
}
Beetsma, R. and Giuliodori, M. Discretionary Fiscal Policy: Review and Estimates for the EU 2010 (2948)School: CESifo Group Munich  techreport URL 
Abstract: We briefly review the theoretical and empirical consequences of discretionary fiscal policy changes, after which we provide our own estimates for the EU countries. A fiscal expansion raises output and consumption and reduces the trade balance. Moreover, the stimulating effect of higher government purchases is weaker and the trade balance reduction is larger for more open EU economies, consistent with larger leakage effects. Further direct estimates suggest that fiscal expansions in large EU economies have non-negligible consequences for economic activity in the main trading partners. This provides a rationale for the concerted fiscal expansion recently initiated by the European Commission.
BibTeX:
@techreport{Beetsma2010,
  author = {Roel Beetsma and Massimo Giuliodori},
  title = {Discretionary Fiscal Policy: Review and Estimates for the EU},
  school = {CESifo Group Munich},
  year = {2010},
  number = {2948},
  url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1555609}
}
Bénassy-Quéré, A. and Cimadomo, J. Changing Patterns of Domestic and Cross-Border Fiscal Policy Multipliers in Europe and the US 2006 (2006-24)School: CEPII research center  techreport URL 
Abstract: This paper documents time variation in domestic fiscal policy multipliers in Germany, the UK and the US, and in cross-border fiscal spillovers from Germany to the seven largest European Union economies. We propose two VAR models which incorporate three "global factors" representing developments in the world economy, and we combine them with identification of fiscal shocks à la Blanchard and Perotti (2002) and Perotti (2005), to study the effects of net tax and government spending shocks on GDP, inflation and interest rates. By recursively estimating these models on different samples of data, we find that the domestic impact of tax shocks has been positive but vanishing for Germany and the US, stably not significant for the UK. Financial markets deregulations may play an important role in that since they allow households to be less dependent on disposable income and to smooth more easily consumption. Domestic government spending multipliers are found to be positive but feeble in the short-run and close to zero or slightly negative in the medium-run, implying that private consumption and investments might be crowded out. These results suggest that, in the European Monetary Union, discretionary fiscal policy "surprises" (i.e. unexpected tax cuts and government spending expansions) cannot be used by governments as substitutes for lost national monetary instruments, since they have shown to be progressively ineffective over time. Finally, we find that fiscal expansions in Germany have had beneficial (though declining) effects for neighboring countries, especially the smaller ones. This may indicate that the trade channel of transmission of fiscal policy dominates the interest rate one.
BibTeX:
@techreport{Benassy-Quere2006,
  author = {Agnès Bénassy-Quéré and Jacopo Cimadomo},
  title = {Changing Patterns of Domestic and Cross-Border Fiscal Policy Multipliers in Europe and the US},
  school = {CEPII research center},
  year = {2006},
  number = {2006-24},
  url = {http://www.cepii.fr/PDF_PUB/wp/2006/wp2006-24.pdf}
}
Bermperoglu, D., Pappa, E. and Vella, E. Spending-based austerity measures and their effects on output and unemployment 2013 (9383)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: We compare the output and unemployment effects of fiscal adjustments in different types of government outlays in the US, Canada, Japan, and the UK. We identify shocks in government consumption, investment, vacancies and government wages in a SVAR using sign restrictions extracted from a New-Keynesian model with matching frictions in the private and public sector, endogenous labor force participation and heterogeneous unemployed jobseekers. Government vacancy cuts are associated with the highest output losses and the lowest gains in terms of deficit reductions. This is because such shocks generate an additional wealth effect: they induce a fall in the number of working members of the household that leads to a fall in private consumption and investment demand. On the other hand, government wage cuts are the least destructive device for cutting the budget.
BibTeX:
@techreport{Bermperoglu2013,
  author = {Bermperoglu, Dimitrios and Pappa, Evi and Vella, Eugenia},
  title = {Spending-based austerity measures and their effects on output and unemployment},
  school = {C.E.P.R. Discussion Papers},
  year = {2013},
  number = {9383},
  url = {http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9383}
}
Berti, K., de Castro, F. and Salto, M. Effects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics in EU Member States 2013 (504)School: Directorate General Economic and Financial Affairs (DG ECFIN), European Commission  techreport URL 
Abstract: This paper presents a simple analysis of the public debt-to-GDP ratio responses to fiscal consolidation efforts envisaged in the 2013 Stability and Convergence Programmes presented by EU Member States. In this paper we assess the response of the debt-to-GDP ratio to the fiscal consolidation efforts envisaged in the 2013 Stability and Convergence Programmes (SCPs) presented by EU Member States, under different assumptions on the underlying fiscal multipliers. The effects of fiscal consolidation are assessed against a counterfactual no-consolidation scenario, in which the structural primary balance is kept constant at 2012 value. We show that large fiscal multipliers lead to temporary increases in the debt ratio following consolidation, relative to the no-consolidation baseline. However, for high but plausible values of the multipliers, such counter-intuitive effects are relatively short-lived (maximum three years from the beginning of the consolidation programme). Increases in the debt ratio are anyway more protracted if financial markets react myopically to consolidation efforts (demanding higher yields). Despite the possible negative short-term effects, consolidation is needed as the debt dynamic in absence of policy intervention is in many cases quite steep and further debt increases would raise the likelihood of a self-defeating dynamics in the future. Based on our simple analytical framework, short-term increases in the debt ratio (relative to baseline) following consolidation could take place for a group of countries expected to experience high fiscal multipliers, including Belgium, Cyprus, France, Greece, Italy, Ireland, Portugal, Slovenia and Spain.
BibTeX:
@techreport{Berti2013,
  author = {Katia Berti and Francisco de Castro and Matteo Salto},
  title = {Effects of fiscal consolidation envisaged in the 2013 Stability and Convergence Programmes on public debt dynamics in EU Member States},
  school = {Directorate General Economic and Financial Affairs (DG ECFIN), European Commission},
  year = {2013},
  number = {504},
  url = {http://ec.europa.eu/economy_finance/publications/economic_paper/2013/pdf/ecp504_en.pdf}
}
Bi, H. and Leeper, E.M. Analyzing Fiscal Sustainability 2013 (13-27)School: Bank of Canada  techreport URL 
Abstract: The authors study the implications of fiscal policy behaviour for sovereign risk in a framework that determines a country's fiscal limit, the point at which, for economic or political reasons, taxes and spending can no longer adjust to stabilize debt. A real business cycle model maps the economic environment - expected fiscal policy, the distribution of exogenous disturbances and private agents' behaviour - into a distribution for the maximum sustainable debt-to-GDP ratio. Default is possible at any point on this fiscal limit distribution. Calibrations of the model to Greek and Swedish data illustrate how the framework can be used to study actual fiscal reforms undertaken by developed economies facing sovereign risk pressures.
BibTeX:
@techreport{Bi2013,
  author = {Huixin Bi and Eric M. Leeper},
  title = {Analyzing Fiscal Sustainability},
  school = {Bank of Canada},
  year = {2013},
  number = {13-27},
  url = {http://www.bankofcanada.ca/wp-content/uploads/2013/08/wp2013-27.pdf}
}
Bloom, N., Floetotto, M., Jaimovich, N., Saporta-Eksten, I. and Terry, S.J. Really Uncertain Business Cycles 2014 (14-18)School: Center for Economic Studies, U.S. Census Bureau  techreport URL 
Abstract: We propose uncertainty shocks as a new shock that drives business cycles. First, we demonstrate that microeconomic uncertainty is robustly countercyclical, rising sharply during recessions, particularly during the Great Recession of 2007-2009. Second, we quantify the impact of time-varying uncertainty on the economy in a dynamic stochastic general equilibrium model with heterogeneous firms. We find that reasonably calibrated uncertainty shocks can explain drops and rebounds in GDP of around 3%. Moreover, we show that increased uncertainty alters the relative impact of government policies, making them initially less effective and then subsequently more effective.
BibTeX:
@techreport{Bloom2014a,
  author = {Nicholas Bloom and Max Floetotto and Nir Jaimovich and Itay Saporta-Eksten and Stephen J. Terry},
  title = {Really Uncertain Business Cycles},
  school = {Center for Economic Studies, U.S. Census Bureau},
  year = {2014},
  number = {14-18},
  url = {ftp://ftp2.census.gov/ces/wp/2014/CES-WP-14-18.pdf}
}
Bloom, N. Time-varying Uncertainty in Macro 2014 (2014-3)School: Society for Economic Dynamics  techreport URL 
Abstract: Slides for plenary talk delivered at the annual meeting of the Society for Economic Dynamics.
BibTeX:
@techreport{Bloom2014b,
  author = {Nick Bloom},
  title = {Time-varying Uncertainty in Macro},
  school = {Society for Economic Dynamics},
  year = {2014},
  number = {2014-3},
  url = {https://economicdynamics.org/wp-content/uploads/SED_Annual_Meeting/bloom14.pdf}
}
Boris Cournède, A.G. and Pina, Á. Reconciling fiscal consolidation with growth and equity 2014
Vol. 2013School: OECD 
techreport URL 
Abstract: Despite sustained efforts made in recent years to rein in budget deficits, a majority of OECD countries still face substantial public finance consolidation needs. While essential to avoid the disruption and large costs ultimately associated with unsustainable public finances, fiscal consolidation complicates the task of achieving other policy goals. In most cases, it weighs on demand in the short term. And, if too little attention is paid to the mix of instruments used to achieve consolidation, it can undermine long-term growth, exacerbate income inequality and slow the process of global rebalancing. It is therefore important for governments to adopt consolidation strategies that minimise these adverse side-effects. The analysis proposes consolidation strategies that take into account other policy goals as well as country-specific circumstances and preferences. To do so, increases in particular taxes and cuts in specific spending areas are assessed for their effects on short- and long-term growth, income distribution and external accounts. The results of detailed illustrative simulations indicate that a significant number of OECD countries may have to raise harmful taxes or cut valuable spending areas to deliver sufficient consolidation, underscoring the need for structural reforms to counteract these side-effects. The results are robust to an extensive range of sensitivity checks.
BibTeX:
@techreport{BorisCournede2014,
  author = {Boris Cournède, Antoine Goujard and Álvaro Pina},
  title = {Reconciling fiscal consolidation with growth and equity},
  school = {OECD},
  year = {2014},
  volume = {2013},
  url = {http://www.oecd-ilibrary.org/economics/reconciling-fiscal-consolidation-with-growth-and-equity_eco_studies-2013-5jzb44vzbkhd}
}
Born, B., Müller, G. and Pfeifer, J. Does austerity pay off? 2015 C.E.P.R. Discussion Papers(10425)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: We ask whether cuts of government consumption lower or raise the sovereign default premium. To address this question, we set up a new data set for 38 emerging and advanced economies which contains quarterly time-series observations for sovereign default premia, government consumption, and output. We find that whether austerity pays off depends on a) initial conditions and b) the time-horizon under consideration. Spending cuts in times of fiscal stress raise default premia, but lower premia in benign times. These findings pertain to the short run. Austerity always pays off in the long run, but particularly so if initial conditions are bad.
BibTeX:
@techreport{Born2015,
  author = {Born, Benjamin and Müller, Gernot and Pfeifer, Johannes},
  title = {Does austerity pay off?},
  journal = {C.E.P.R. Discussion Papers},
  school = {C.E.P.R. Discussion Papers},
  year = {2015},
  number = {10425},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=10425}
}
Boussard, J., de Castro, F. and Salto, M. Fiscal Multipliers and Public Debt Dynamics in Consolidations 2012 (460)School: Directorate General Economic and Financial Affairs (DG ECFIN), European Commission  techreport URL 
Abstract: The success of a consolidation in reducing the debt ratio depends crucially on the value of the multiplier, which measures the impact of consolidation on growth, and on the reaction of sovereign yields to such a consolidation. We present a theoretical framework that formalizes the response of the public debt ratio to fiscal consolidations in relation to the value of fiscal multipliers, the starting debt level and the cyclical elasticity of the budget balance. We also assess the role of markets confidence to fiscal consolidations under alternative scenarios. We find that with high levels of public debt and sizeable fiscal multipliers, debt ratios are likely to increase in the short term in response to fiscal consolidations. Hence, the typical horizon for a consolidation during crises episodes to reduce the debt ratio is two-three years, although this horizon depends critically on the size and persistence of fiscal multipliers and the reaction of financial markets. Anyway, such undesired debt responses are mainly short-lived. This effect is very unlikely in non-crisis times, as it requires a number of conditions difficult to observe at the same time, especially high fiscal multipliers.
BibTeX:
@techreport{Boussard2012,
  author = {Jocelyn Boussard and Francisco de Castro and Matteo Salto},
  title = {Fiscal Multipliers and Public Debt Dynamics in Consolidations},
  school = {Directorate General Economic and Financial Affairs (DG ECFIN), European Commission},
  year = {2012},
  number = {460},
  url = {http://ec.europa.eu/economy_finance/publications/economic_paper/2012/pdf/ecp460_en.pdf}
}
Bouthevillain, C., Cour-Thimann, P., van de Dool, G., Hern�ndez de Cos, P., Langenus, G., Mohr, M., Momigliano, S. and Tujula, M. Cyclically adjusted budget balances: an alternative approach 2001 (0077)School: European Central Bank  techreport URL 
Abstract: Estimates of cyclically-adjusted budget balances, correcting actual government budget balances for business cycle fluctuations, are produced by many institutions, including the European Commission, the IMF and the OECD. This paper presents an alternative approach for the cyclical adjustment of budget balances. The approach is based on a disaggregated method for the calculation of the cyclical component of the budget balance. In this approach, the effects of changes in the structure of demand and national income on government revenue and expenditure are captured. Cases where the various macroeconomic bases are in different phases of the cycle or exhibit fluctuations of different magnitude are taken into account in this way. The computation of the cyclical components of these macroeconomic bases is based on the Hodrick-Prescott filter and takes into account the latest evidence presented in the literature about the properties of this filter. The paper also presents new estimates of the elasticities of individual budget items with respect to the relevant macroeconomic variables. The method is used within the ESCB for the estimation of cyclically adjusted budget balances of the EU countries JEL Classification: E32, E60
BibTeX:
@techreport{Bouthevillain2001,
  author = {Bouthevillain, Carine and Cour-Thimann, Philippine and van de Dool, Gerrit and Hern�ndez de Cos, Pablo and Langenus, Geert and Mohr, Matthias and Momigliano, Sandro and Tujula, Mika},
  title = {Cyclically adjusted budget balances: an alternative approach},
  school = {European Central Bank},
  year = {2001},
  number = {0077},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp077.pdf}
}
Caggiano, G., Castelnuovo, E. and Groshenny, N. Uncertainty Shocks and Unemployment Dynamics in U.S. Recessions 2014 (wp2014n12)School: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne  techreport URL 
Abstract: We investigate the effects of uncertainty shocks on unemployment dynamics in the post- WWII U.S. recessions via non-linear (Smooth-Transition) VARs. The relevance of uncertainty shocks is found to be much larger than that predicted by standard linear VARs in terms of (i) magnitude of the reaction of the unemployment rate to such shocks, and (ii) contribution to the variance of the prediction errors of unemployment at business cycle frequencies. We discuss the ability of different classes of DSGE models to replicate our results.
BibTeX:
@techreport{Caggiano2014,
  author = {Giovanni Caggiano and Efrem Castelnuovo and Nicolas Groshenny},
  title = {Uncertainty Shocks and Unemployment Dynamics in U.S. Recessions},
  school = {Melbourne Institute of Applied Economic and Social Research, The University of Melbourne},
  year = {2014},
  number = {wp2014n12},
  url = {http://www.melbourneinstitute.com/downloads/working_paper_series/wp2014n12.pdf}
}
Carnot, N. Evaluating Fiscal Policy: A Rule of Thumb 2014 (526)School: Directorate General Economic and Financial Affairs (DG ECFIN), European Commission  techreport URL 
Abstract: This paper introduces a simple rule for appraising the economic soundness of fiscal policies. It connects fiscal policy to a long-run debt objective, taken as an anchor, while arbitraging symmetrically between this debt objective and output stabilisation. The rule offers a benchmark to assess the evolution of primary expenditure, net of the impact of discretionary revenue measures, taken as a proper operational target for annual fiscal policy. The properties and implications of this rule of thumb are analysed drawing on qualitative arguments and retrospective simulations.
BibTeX:
@techreport{Carnot2014,
  author = {Nicolas Carnot},
  title = {Evaluating Fiscal Policy: A Rule of Thumb},
  school = {Directorate General Economic and Financial Affairs (DG ECFIN), European Commission},
  year = {2014},
  number = {526},
  url = {http://ec.europa.eu/economy_finance/publications/economic_paper/2014/ecp526_en.htm}
}
Castelnuovo, E., Caggiano, G. and Pellegrino, G. Estimating the Real Effects of Uncertainty Shocks at the Zero Lower Bound 2015 (0200)School: Dipartimento di Scienze Economiche "Marco Fanno"  techreport URL 
Abstract: We employ a parsimonious nonlinear Interacted-VAR to examine whether the real effects of uncertainty shocks are greater when the economy is at the Zero Lower Bound. Our results show that the contractionary effects of uncertainty shocks are statistically larger when the ZLB is binding, with differences that are economically important. Such differences are shown not to be driven by the contemporaneous occurrence of the Great Recession. These findings lend support to recent theoretical contributions on the interaction between uncertainty shocks and the stance of monetary policy.
BibTeX:
@techreport{Castelnuovo2015,
  author = {Efrem Castelnuovo and Giovanni Caggiano and Giovanni Pellegrino},
  title = {Estimating the Real Effects of Uncertainty Shocks at the Zero Lower Bound},
  school = {Dipartimento di Scienze Economiche "Marco Fanno"},
  year = {2015},
  number = {0200},
  url = {http://economia.unipd.it/sites/decon.unipd.it/files/20150200.pdf}
}
de Castro, F., González-Páramo, J.M. and de Cos, P.H. Evaluating the dynamics of fiscal policy in Spain: patterns of interdependence and consistency of public expenditure and revenues 2001 (0103)School: Banco de España;Working Papers Homepage  techreport URL 
Abstract: Two issues are addressed in this paper. First, we attempt to ascertain whether the current fiscal policy in Spain satisfies the intertemporal borrowing constraint. For this purpose, we apply the traditional empirical tests of sustainability proposed in the literature, that pay special attention to integration orders of deficit and debt processes and the existence of cointegration relationships between revenues and expenditures. Under this approach, a sustainable fiscal policy would indicate that if fiscal variables follow the pattern of the past in the future, no problems in marketing public debt are expected to arise.
BibTeX:
@techreport{Castro2001,
  author = {Francisco de Castro and José M. González-Páramo and Pablo Hernández de Cos},
  title = {Evaluating the dynamics of fiscal policy in Spain: patterns of interdependence and consistency of public expenditure and revenues},
  school = {Banco de España;Working Papers Homepage},
  year = {2001},
  number = {0103},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/01/Fic/dt0103e.pdf}
}
de Castro, F., Marti, F., Montesinos, A., Pérez, J.J. and Sanchez-Fuentes, A.J. Fiscal policies in Spain: Main stylises facts revisited 2014 (1408)School: Banco de España;Working Papers Homepage  techreport URL 
Abstract: We provide key stylised facts on fiscal policy developments in Spain over the past three decades using quarterly data (1986Q1-2012Q2). First, we compute stylised facts on the cyclical properties of fiscal policies over that period. Next, we report updated evidence on the macroeconomic effects of non-systematic fiscal policies, including updated estimates of their macroeconomic impact (fiscal multipliers) for alternative datasets. To perform the analysis in the paper we built up a comprehensive database of seasonally adjusted quarterly fiscal variables for the period of interest.
BibTeX:
@techreport{Castro2014,
  author = {Francisco de Castro and Francisco Marti and Antonio Montesinos and Javier J. Pérez and A. Jesus Sanchez-Fuentes},
  title = {Fiscal policies in Spain: Main stylises facts revisited},
  school = {Banco de España;Working Papers Homepage},
  year = {2014},
  number = {1408},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/14/Fich/dt1408e.pdf}
}
Celasun, O., Grigoli, F., Honjo, K., Kapsoli, J., Klemm, A.D., Lissovolik, B., Luksic, J., Badia, M.M., Pereira, J., Poplawski-Ribeiro, M. and Shang, B. Fiscal Policy in Latin America; Lessons and Legacies of the Global Financial Crisis 2015 (15/6)School: International Monetary Fund  techreport URL 
Abstract: Latin America's bold fiscal policy reaction to the global financial crisis was hailed as a sign that the region had finally overcome its procyclical fiscal past. However, most countries of the region have not yet rebuilt their fiscal space, despite buoyant commodity revenues and relatively strong growth in the aftermath of the crisis. Using the experience of Brazil, Chile, Colombia, Mexico, Peru, and Uruguay, this paper examines the lessons and legacies of the crisis by addressing the following questions, among others: How much did the 2009 fiscal stimulus help growth? What shortcomings were revealed in the fiscal policy frameworks? What institutional reforms are now needed to provide enduring anchors for fiscal policy? How much rebuilding of buffers is needed going forward?
BibTeX:
@techreport{Celasun2015,
  author = {Oya Celasun and Francesco Grigoli and Keiko Honjo and Javier Kapsoli and Alexander D Klemm and Bogdan Lissovolik and Jan Luksic and Marialuz Moreno Badia and Joana Pereira and Marcos Poplawski-Ribeiro and Baoping Shang and},
  title = {Fiscal Policy in Latin America; Lessons and Legacies of the Global Financial Crisis},
  school = {International Monetary Fund},
  year = {2015},
  number = {15/6},
  url = {http://www.imf.org/external/pubs/ft/sdn/2015/sdn1506.pdf}
}
Chung, H. and Leeper, E.M. What has financed government debt? 2007 School: National Bureau of Economic Research  techreport URL 
Abstract: Dynamic rational expectations models imply that the real value of debt in the hands of the public must be equal to the expected present-value of surpluses. We impose this equilibrium condition on an identified VAR and characterize the way in which the present-value support of debt varies across various types of fiscal policy shocks and between fiscal and non-fiscal shocks. The role of expected primary surpluses in supporting innovations to debt depends on the nature of the shock. For some fiscal policy shocks, debt is supported almost entirely by changes in the present-value of surpluses, however, in the case of other fiscal policy shocks, surpluses fail to adjust and instead leave a large role for expected changes in discount rates. Horizons over which debt innovations are financed are long - on the order of fifty years - while present-values calculated up to any finite horizon up to then fluctuate wildly, particularly following government spending and transfer shocks.
BibTeX:
@techreport{Chung2007a,
  author = {Chung, Hess and Leeper, Eric M},
  title = {What has financed government debt?},
  school = {National Bureau of Economic Research},
  year = {2007},
  url = {http://www.nber.org/papers/w13425}
}
Cimadomo, J., Hauptmeier, S. and Sola, S. Identifying the effects of government spending shocks with and without expected reversal: an approach based on U.S. real-time data 2011 (1361)School: European Central Bank  techreport URL 
Abstract: This paper investigates how expectations about future government spending affect the transmission of fiscal policy shocks. We study the effects of two different types of government spending shocks in the United States: (i) spending shocks that are accompanied by an expected reversal of public spending growth below trend; (ii) spending shocks that are accompanied by expectations of future spending growth above trend. We use the Ramey (2011)'s time series of military build-ups to measure exogenous spending shocks, and deviations of forecasts of public spending with respect to past trends, evaluated in real-time, to distinguish shocks into these two categories. Based on a structural VAR analysis, our results suggest that shocks associated with an expected spending reversal exert expansionary effects on the economy and accelerate the correction of the initial increase in public debt. Shocks associated with expected spending growth above trend, instead, are characterized by a contraction in aggregate demand and a more persistent increase in public debt. The main channel of transmission seems to run through agents' perception of the future macroeconomic environment. JEL Classification: E62, E65, H20
BibTeX:
@techreport{Cimadomo2011,
  author = {Cimadomo, Jacopo and Hauptmeier, Sebastian and Sola, Sergio},
  title = {Identifying the effects of government spending shocks with and without expected reversal: an approach based on U.S. real-time data},
  school = {European Central Bank},
  year = {2011},
  number = {1361},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1361.pdf}
}
Cimadomo, J., Hauptmeier, S. and Zimmermann, T. Fiscal Consolidations and Banking Stability 2012 (2012-32)School: CEPII research center  techreport URL 
Abstract: We empirically investigate the effects of fiscal policy on bank balance sheets, focusing on episodes of fiscal consolidation. To this aim, we employ a very rich data set of individual banks' balance sheets, combined with a newly compiled data set on fiscal consolidations. We find that standard capital adequacy ratios such as the Tier-1 ratio tend to improve following episodes of fiscal consolidation. Our results suggest that this improvement results from a portfolio re-balancing from private to public debt securities which reduces the risk-weighted value of assets. In fact, if fiscal adjustment efforts are perceived as structural policy changes that improve the sustainability of public finances and, therefore, reduces credit risk, the banks' demand for government securities increases relative to other assets.
BibTeX:
@techreport{Cimadomo2012,
  author = {Jacopo Cimadomo and Sebastian Hauptmeier and Tom Zimmermann},
  title = {Fiscal Consolidations and Banking Stability},
  school = {CEPII research center},
  year = {2012},
  number = {2012-32},
  url = {http://www.cepii.fr/PDF_PUB/wp/2012/wp2012-32.pdf}
}
Cimadomo, J. and D'Agostino, A. Combining time-variation and mixed-frequencies: an analysis of government spending multipliers in Italy 2015 (1856)School: European Central Bank  techreport URL 
Abstract: In this paper, we propose a time-varying parameter VAR model with stochastic volatility which allows for estimation on data sampled at different frequencies. Our contribution is twofold. First, we extend the methodology developed by Cogley and Sargent (2005), and Primiceri (2005), to a mixed-frequency setting. In particular, our approach allows for the inclusion of two different categories of variables (high-frequency and low-frequency) into the same time varying model. Second, we use this model to study the macroeconomic effects of government spending shocks in Italy over the 1988Q4-2013Q3 period. Italy - as well as most other euro area economies - is characterised by short quarterly time series for fiscal variables, whereas annual data are generally available for a longer sample before 1999. Our results show that the proposed time-varying mixed-frequency model improves on the performance of a simple linear interpolation model in generating the true path of the missing observations. Second, our empirical analysis suggests that government spending shocks tend to have positive effects on output in Italy. The fiscal multiplier, which is maximized at the one year horizon, follows a U-shape over the sample considered: it peaks at around 1.5 at the beginning of the sample, it then stabilizes between 0.8 and 0.9 from the mid-1990s to the late 2000s, before rising again to above unity during of the recent crisis. JEL Classification: C32, E62, H30, H50
BibTeX:
@techreport{Cimadomo2015,
  author = {Cimadomo, Jacopo and D'Agostino, Antonello},
  title = {Combining time-variation and mixed-frequencies: an analysis of government spending multipliers in Italy},
  school = {European Central Bank},
  year = {2015},
  number = {1856},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1856.en.pdf}
}
Cloyne, J.S. Discretionary tax shocks in the United Kingdom 1945-2009: a narrative account and dataset 2010 (34913)School: University Library of Munich, Germany  techreport URL 
Abstract: This paper constructs a narrative account of all legislated discretionary policy changes in the United Kingdom from 1945 to 2009. Following Romer and Romer (2009, 2010), evidence of the policymakers' motivation is presented from U.K. official Budget documents together with technical notes, press releases, Acts of Parliament, the Budget speech by the Chancellor of the Exchequer and related entries in the parliamentary record (Hansard). The historical context in which the decision was made is also discussed. Using the given motives I isolate tax policy changes which were not responding to, or influenced by, current or prospective economic shocks. This "exogenous" category is comprised of actions to improve long-run economic performance, those motivated by ideological or political reasons, rulings from external bodies such as courts, and fiscal consolidation measures based on long-run considerations. By contrast, the "endogenous" changes are actions to manage demand, to stimulate production, to offset a debt crisis and those to fund spending decisions. For all the tax changes I collect information on the announcement, implementation and withdrawal dates as well as the type of the tax (such as income tax). The dataset contains nearly 2,500 tax changes and is aggregated into a quarterly series for analysis. In addition to creating a novel dataset this paper also contributes to the post-war history of U.K. taxation.
BibTeX:
@techreport{Cloyne2010,
  author = {Cloyne, James S},
  title = {Discretionary tax shocks in the United Kingdom 1945-2009: a narrative account and dataset},
  school = {University Library of Munich, Germany},
  year = {2010},
  number = {34913},
  url = {https://mpra.ub.uni-muenchen.de/37739/2/MPRA_paper_37739.pdf}
}
Cloyne, J. Government spending shocks, wealth effects and distortionary taxes 2014 (1413)School: Centre for Macroeconomics (CFM)  techreport URL 
Abstract: The size and sign of the government spending multiplier crucially depends on how the spending is financed and how consumers respond to implied future tax increases. I investigate this issue in an estimated New Keynesian DSGE model with distortionary labor and capital taxes and, importantly, with preferences that allow the wealth effect on labor supply to vary. Specifically I assess whether the model can explain the empirical evidence for the United States and examine the transmission mechanism, for realistic policy rules. I show that the model can match the positive empirical response of key variables including output, consumption and the real wage. I find that the role of the wealth effect on labor supply is small and that while tax rates rise following a spending shock these increases are modest, with debt rising. Deficit financed spending increases are therefore expansionary, but this is due to sticky prices rather than the wealth effect channel.
BibTeX:
@techreport{Cloyne2014,
  author = {James Cloyne},
  title = {Government spending shocks, wealth effects and distortionary taxes},
  school = {Centre for Macroeconomics (CFM)},
  year = {2014},
  number = {1413},
  url = {http://www.centreformacroeconomics.ac.uk/Discussion-Papers/2014/CFMDP2014-13-Paper.pdf}
}
Cogan, J., Taylor, J., Wieland, V. and Wolters, M. Fiscal Consolidation Strategy: An Update for the Budget Reform Proposal of March 2013 2013 (12-033)School: Stanford Institute for Economic Policy Research  techreport URL 
Abstract: Recently, we evaluated a fiscal consolidation strategy for the United States that would bring the government budget into balance by gradually reducing government spending relative to GDP to the ratio that prevailed prior to the crisis (Cogan et al, JEDC 2013). Specifically, we published an analysis of the macroeconomic consequences of the 2013 Budget Resolution that was passed by the U.S. House of Representatives in March 2012. In this note, we provide an update of our research that evaluates this year’s budget reform proposal that is to be discussed and voted on in the House of Representative in March 2013. Contrary to the views voiced by critics of fiscal consolidation, we show that such a reduction in government purchases and transfer payments can increase GDP immediately and permanently relative to a policy without spending restraint. Our research makes use of a modern structural model of the economy that incorporates the long-standing essential features of economics: opportunity costs, efficiency, foresight and incentives. GDP rises because households take into account that spending restraint helps avoid future increases in tax rates. Lower taxes imply less distorted incentives for work, investment and production relative to a scenario without fiscal consolidation and lead to higher growth.
BibTeX:
@techreport{Cogan2013,
  author = {John Cogan and John Taylor and Volker Wieland and Maik Wolters},
  title = {Fiscal Consolidation Strategy: An Update for the Budget Reform Proposal of March 2013},
  school = {Stanford Institute for Economic Policy Research},
  year = {2013},
  number = {12-033},
  url = {http://www-siepr.stanford.edu/repec/sip/12-033.pdf}
}
Corsetti, G. and Roubini, N. Fiscal Deficits, Public Debt and Government Solvency: Evidence from OECD Countries 1991 (3658)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper discusses different empirical tests of public sector solvency and applies them to a sample of 18 OCED countries. Provided that the government solvency constraint need to be imposed, these tests develop from the idea of verifying whether the intertemporal budget constraint of the public sector would be satisfied a) had the fiscal and financial policy in the sample been pursued indefinitely and b) were the relevant macro and structural features of the economy stable over time. If solvency is not supported by the empirical evidence, a change either in the policy or in the relevant macro and structural variables (growth, inflation, interest rates, demographic factors) must occur at some point in the future. Among the G-7 countries, public sector solvency seems a serious issue in Italy, while does not appear to be a problem in the cases of Germany and Japan. The evidence for the U.S.A. is mixed. Problems of sustainability of the current path of fiscal policies are also present in Belgium, Ireland, the Netherlands and Greece.
BibTeX:
@techreport{Corsetti1991,
  author = {Giancarlo Corsetti and Nouriel Roubini},
  title = {Fiscal Deficits, Public Debt and Government Solvency: Evidence from OECD Countries},
  school = {National Bureau of Economic Research, Inc},
  year = {1991},
  number = {3658},
  url = {http://www.nber.org/papers/w3658.pdf}
}
Corsetti, G. and Roubini, N. Tax Smoothing Discretion Versus Balanced Budget Rules in the Presence of Politically Motivated Fiscal Deficits: The Design of Optimal Fiscal Rules for Europe after 1992 1992 (682)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: We analyse the arguments in favour and against binding fiscal rules such as those recently agreed by European countries as preconditions for participation in the third phase of the European Monetary Union. The evidence in the paper suggests that a number of EC countries are following unsustainable fiscal policies and that this "deficits bias" may be partly due to political distortions. Binding balanced budget rules would eliminate the deficits bias that appears in the presence of such distortions, but would also prevent the use of potentially beneficial tax-smoothing budget deficits in response to transitory shocks. More flexible fiscal rules enforced by credible sanctions against deviant countries appear to be superior to rigid balanced-budget rules and discretionary equilibria.
BibTeX:
@techreport{Corsetti1992,
  author = {Corsetti, Giancarlo and Roubini, Nouriel},
  title = {Tax Smoothing Discretion Versus Balanced Budget Rules in the Presence of Politically Motivated Fiscal Deficits: The Design of Optimal Fiscal Rules for Europe after 1992},
  school = {C.E.P.R. Discussion Papers},
  year = {1992},
  number = {682},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=682}
}
Corsetti, G. and Roubini, N. Optimal Government Spending and Taxation in Endgenous Growth Models 1996 (5851)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper analyzes optimal spending, tax and financial policies in models of endogenous growth where public spending is productive. We extend previous work in four directions. First, we analyze optimal policies when the government is allowed to borrow and lend, rather than being restricted to run a balanced budget in every period. Second, we develop a model with a separate human capital accumulation sector. Therefore, the properties of optimal policies depend on whether government spending affects the productivity of the final goods sector or the human capital accumulation sector. Third, we consider the policy implications of alternative assumptions about which factor of production benefits from the external effects of productive public goods. Fourth, we study the implications of restrictions on the menu of tax instruments available to the policy maker. We contrast optimal tax rates on human and physical capital under different assumptions on technology and distribution. We analyze the welfare properties of public debt and assets.
BibTeX:
@techreport{Corsetti1996,
  author = {Giancarlo Corsetti and Nouriel Roubini},
  title = {Optimal Government Spending and Taxation in Endgenous Growth Models},
  school = {National Bureau of Economic Research, Inc},
  year = {1996},
  number = {5851},
  url = {http://www.nber.org/papers/w5851.pdf}
}
de Cos, P.H. and Moral-Benito, E. Endogenous fiscal consolidations 2011 (1102)School: Banco de Espana, Working Papers  techreport URL 
Abstract: There is evidence in the literature of fiscal consolidation episodes producing (non-Keynesian) expansionary effects (e.g. Alesina and Ardagna, 1998). We replicate this result for a panel of OECD countries under exogeneity of the fiscal tightening decision, and provide evidence that this decision is endogenous to GDP so that the exogeneity assumption might be inappropriate. Once this endogeneity is taken into consideration, we find that fiscal consolidations have a negative impact on GDP as expected in a Keynesian framework. We also investigate the determinants of successful consolidations. In particular, we use model averaging to overcome the problem of model uncertainty, and conclude that economic recovery and cuts in public wages are the most important ingredients of a consolidation program for successfully reducing budget deficits.
BibTeX:
@techreport{Cos2011,
  author = {Pablo Hernández de Cos and Enrique Moral-Benito},
  title = {Endogenous fiscal consolidations},
  school = {Banco de Espana, Working Papers},
  year = {2011},
  number = {1102},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1102e.pdf}
}
de Cos, P.H. and Thomas, C. The impact of fiscal consolidation on economic growth. An illustration for the Spanish economy based on a general equilibrium model 2012 (1205)School: Banco de España;Occasional Papers Homepage  techreport URL 
Abstract: This study illustrates the effects of different fiscal consolidation measures on economic activity through simulations performed with a general equilibrium model calibrated to the Spanish economy. Overall, our results show that fiscal consolidation has short-run costs but sizable long-run benefits in terms of growth. Regarding the short-run costs, their magnitude depends crucially on the presence of confidence effects due to the consolidation process, which tend to reduce the value of fiscal multipliers
BibTeX:
@techreport{Cos2012,
  author = {Pablo Hernández de Cos and Carlos Thomas},
  title = {The impact of fiscal consolidation on economic growth. An illustration for the Spanish economy based on a general equilibrium model},
  school = {Banco de España;Occasional Papers Homepage},
  year = {2012},
  number = {1205},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/12/Fich/do1205.pdf}
}
de Cos, P.H. and Jimeno, J.F. Fiscal policy and external imbalances in a debt crisis: the Spanish case 2013 (1303)School: Banco de España;Occasional Papers Homepage  techreport URL 
Abstract: In this paper we reflect on the role that fiscal policy could play in the resolution of the crisis in Eurozone countries crippled by both public and private debt, and beset by growth and competitiveness problems. As an illustration, we revisit the Spanish case, a paradigmatic example of the economic difficulties created by high debt and internal and external imbalances. After describing the build-up of fiscal and macroeconomic imbalances in Spain during the period 1995-2007, we first discuss how the correction of macroeconomic imbalances conditions progress on the fiscal consolidation front and, secondly, how fiscal consolidation affects the correction of imbalances. We conclude that the role that national fiscal policies can play in these countries to expand demand and reduce the costs of solving external and internal imbalances seems limited. Also, overall, the best contribution that fiscal policy can achieve under these constraints is through a better targeting of government expenditures and tax reforms, aimed at introducing permanent measures to stabilise debt ratios. These could then be combined with productivity-enhancing structural reforms and with improvements in product market regulation to increase competition, so that the short-term costs of the internal devaluation required are reduced
BibTeX:
@techreport{Cos2013a,
  author = {Pablo Hernández de Cos and Juan F. Jimeno},
  title = {Fiscal policy and external imbalances in a debt crisis: the Spanish case},
  school = {Banco de España;Occasional Papers Homepage},
  year = {2013},
  number = {1303},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/13/Fich/do1303e.pdf}
}
Cournède, B. and Gonand, F. Restoring Fiscal Sustainability in the Euro Area: Raise Taxes or Curb Spending? 2006 (520)School: OECD Publishing  techreport URL 
Abstract: With population ageing, fiscal consolidation has become of paramount importance for euro area countries. Consolidation can be pursued in various ways, with different effects on potential growth, which itself will be dragged down by ageing. A dynamic general equilibrium model with overlapping generations and a public finance block (including a pay-as-you-go pension regime, a health care system, non ageingrelated public spending and a stock of debt to be repaid) is used to compare the macroeconomic impact of four scenarios: a) increasing taxes to finance unchanged pensions and repay public debt, b) lowering future pension replacement rates and repaying public debt through a lower ratio of non ageing-related outlays to GDP, c) raising the retirement age by 1.25 years per decade and increasing taxes only to pay off debt, and d) increasing the retirement age by 1.25 years per decade and paying off debt through a lower ratio of non ageing-related expenditure to GDP. This last scenario is the one where growth is strongest: with gradual increases in the retirement age and spending restraint, average GDP growth in the 2010s would be 0.34 percentage point stronger than in a scenario where fiscal consolidation is achieved exclusively through tax hikes. The appropriate conclusion from the model is not that public spending is bad per se, but that cuts to lower-priority spending items can deliver surprisingly large income gains compared with the alternative of raising taxes.
BibTeX:
@techreport{Cournede2006,
  author = {Boris Cournède and Frédéric Gonand},
  title = {Restoring Fiscal Sustainability in the Euro Area: Raise Taxes or Curb Spending?},
  school = {OECD Publishing},
  year = {2006},
  number = {520},
  url = {http://www.oecd-ilibrary.org/docserver/download/5l9hksrhhrnp.pdf?expires=1469614169&id=id&accname=guest&checksum=26D1EA1AA8BA546087A1F70BC4195B4F}
}
Cournède, B. The Political Economy of Delaying Fiscal Consolidation 2007 (548)School: OECD Publishing  techreport URL 
Abstract: Over the next decades, many OECD countries are anticipating large increases in public spending as a result of population ageing and other long-term structural trends. The need to put public finances on a sustainable footing is widely recognised, but progress has been uneven and slow. Some policy makers may feel that action can be deferred for a few years at little cost because of the long-term nature of the problem. This paper questions this perception by proposing a model of the political costs of consolidating public finances. The main finding is that even a short delay increases political cost of consolidation quite markedly when ultimately policy makers are facing a deadline by which sustainability must be restored. The conclusion is very robust to changes in assumptions and specification. A variant of the model shows that with an infinite horizon the incentive to consolidate is weaker, which highlights the importance of setting a deadline. This paper relates to the 2007 Economic Survey of the Euro area (www.oecd.org/eco/surveys/euroarea).
BibTeX:
@techreport{Cournede2007,
  author = {Boris Cournède},
  title = {The Political Economy of Delaying Fiscal Consolidation},
  school = {OECD Publishing},
  year = {2007},
  number = {548},
  url = {http://www.oecd-ilibrary.org/economics/the-political-economy-of-delaying-fiscal-consolidation_240788215175}
}
Cournède, B., Goujard, A., Pina, Á. and de Serres, A. Choosing Fiscal Consolidation Instruments Compatible with Growth and Equity 2013 (7)School: OECD Publishing  techreport URL 
Abstract: Despite sustained efforts made in recent years to rein in budget deficits, a majority of OECD countries still face substantial public finance consolidation needs moving forward, owing to the legacy of debt accumulation before the crisis, and to the role played by fiscal policy in rescuing the banking system and supporting aggregate demand in the aftermath of the recession. Further budget consolidation is also needed over a much longer horizon to face long-term public spending pressures, in particular from pensions and health care. Fiscal consolidation complicates the task of achieving other policy goals. In most cases, it weighs on demand in the short term. And, if too little attention is paid to the mix of instruments used to achieve consolidation, it can slow the process of global rebalancing, undermine long-term growth and exacerbate income inequality. It is therefore important for governments to adopt consolidation strategies that minimise these adverse side-effects. The analysis assesses the near and long-term consolidation needs for OECD countries and proposes consolidation strategies that take into account other policy goals as well as country-specific circumstances and preferences. To do so, increases in particular taxes and cuts in specific spending areas are assessed for their effects on short- and longterm growth, income distribution and external accounts. The results of detailed simulations indicate that a significant number of OECD countries may have to raise harmful taxes or cut valuable spending areas to deliver sufficient consolidation, underscoring the need for structural reforms to counteract these side-effects.
BibTeX:
@techreport{Cournede2013,
  author = {Boris Cournède and Antoine Goujard and Álvaro Pina and Alain de Serres},
  title = {Choosing Fiscal Consolidation Instruments Compatible with Growth and Equity},
  school = {OECD Publishing},
  year = {2013},
  number = {7},
  url = {http://dx.doi.org/10.1787/5k43nxq6dzd4-en}
}
Croce, M.M. Tax Uncertainty, Leverage and Asset Prices 2010 (1084)School: Society for Economic Dynamics  techreport URL 
Abstract: In post-war US data, the market price-dividend ratio has risen up until the end of 2008, while corporate tax rates have slowly fallen. We replicate this negative link in a general equilibrium production-based asset pricing model with financial frictions where persistent stochastic changes in the corporate tax rate affect long-term productivity. By calibrating a corporate tax process to US data, we find that: 1) firms optimal response to tax shocks induces persistent swings in macroeconomic variables; 2) with recursive preferences these fluctuations strongly affect asset valuations; 3) endogenous leverage and financial frictions amplify the relevance of tax uncertainty.
BibTeX:
@techreport{Croce2010,
  author = {Mariano Max Croce},
  title = {Tax Uncertainty, Leverage and Asset Prices},
  school = {Society for Economic Dynamics},
  year = {2010},
  number = {1084},
  url = {https://economicdynamics.org/meetpapers/2010/paper_1084.pdf}
}
Cwik, T. Fiscal consolidation using the example of Germany 2012 (2012-80)School: Board of Governors of the Federal Reserve System (U.S.)  techreport URL 
Abstract: After the run up in debt-to-GDP ratios around the world in the aftermath of the financial crisis and the associated lower fiscal space, the question of prudent fiscal consolidation is back on the agenda. In this paper, I study the macroeconomic implications of fiscal consolidation triggered by the newly introduced debt brake in Germany, which dampens the accumulation of debt. I address this question using a medium-size new Keynesian DSGE model for Germany. The model includes the government debt-to-GDP ratio, government transfers, labour income tax, consumption tax and capital tax revenues. I find that the debt brake enforces fiscal consolidation in times of economic expansions without constraining fiscal policy makers in times of recessions. I also find that the debt brake raises the government spending multiplier initially but not over time. Finally, the debt brake, with a fiscal consolidation on the government spending and transfers side, leads to a significant stabilization of the private sector without increasing the volatility of the fiscal instruments.
BibTeX:
@techreport{Cwik2012,
  author = {Tobias Cwik},
  title = {Fiscal consolidation using the example of Germany},
  school = {Board of Governors of the Federal Reserve System (U.S.)},
  year = {2012},
  number = {2012-80},
  url = {http://www.federalreserve.gov/pubs/feds/2012/201280/201280pap.pdf}
}
Diercks, A. and Waller, W. Taxes, Spending, and Market Returns 2014 Social Science Research NetworkSchool: Available at SSRN  techreport URL 
Abstract: How fiscal policy impacts equity and bond returns is an open question. Unlike previous studies, we address this issue in a way that decomposes current returns into news about cash flows and news about discount rates. Moreover, we use narrative methods to identify plausibly exogenous shocks to fiscal policy. Our main findings suggest that tax increases lead to lower cash flow news and lower discount rates. However, the discount rate news dominates so that higher taxes are associated with higher equity returns. We confirm these results with simulations from a standard New Keynesian DSGE model.
BibTeX:
@techreport{Diercks2014,
  author = {Anthony Diercks and William Waller},
  title = {Taxes, Spending, and Market Returns},
  journal = {Social Science Research Network},
  school = {Available at SSRN},
  year = {2014},
  url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2495257}
}
Drautzburg, T. A narrative approach to a fiscal DSGE model 2016 (16-11)School: Federal Reserve Bank of Philadelphia  techreport URL 
Abstract: Structural DSGE models are used both for analyzing policy and the sources of business cycles. Conclusions based on full structural models are, however, potentially affected by misspecification. A competing method is to use partially identified VARs based on narrative shocks. This paper asks whether both approaches agree. First, I show that, theoretically, the narrative VAR approach is valid in a class of DSGE models with Taylor-type policy rules. Second, I quantify whether the two approaches also agree empirically, that is, whether DSGE model restrictions on the VARs and the narrative variables are supported by the data. To that end, I first adapt the existing methods for shock identification with external instruments for Bayesian VARs in the SUR framework. I also extend the DSGE-VAR framework to incorporate these instruments. Based on a standard DSGE model with fiscal rules, my results indicate that the DSGE model identification is at odds with the narrative information as measured by the marginal likelihood. I trace this discrepancy to differences both in impulse responses and identified historical shocks.
BibTeX:
@techreport{Drautzburg2016,
  author = {Drautzburg, Thorsten},
  title = {A narrative approach to a fiscal DSGE model},
  school = {Federal Reserve Bank of Philadelphia},
  year = {2016},
  number = {16-11},
  url = {https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2016/wp16-11.pdf?la=en}
}
Engemann, K.M., Owyang, M.T. and Zubairy, S. A primer on the empirical identification of government spending shocks 2008 Review(Mar), pp. 117-132School: Federal Reserve Bank of St. Louis  techreport URL 
Abstract: The empirical literature on the effects of government spending shocks lacks unanimity about the responses of consumption and wages. Proponents of shocks identified by structural vector auto-regressions (VARs) find results consistent with New Keynesian models: consumption and wages increase. On the other hand, proponents of the narrative approach find results consistent with neoclassical models: consumption and wages decrease. This paper reviews these two identifications and confirms their differences by using standard economic series. It also uses alternative measures of government spending, output, and the labor market and shows that, although there are minor fluctuations within each identification, the disparate results between the two are robust to the alternative measures. However, under the structural VAR approach, the authors find some differences between the responses to federal and state/local government spending.
BibTeX:
@techreport{Engemann2008,
  author = {Kristie M. Engemann and Michael T. Owyang and Sarah Zubairy},
  title = {A primer on the empirical identification of government spending shocks},
  journal = {Review},
  school = {Federal Reserve Bank of St. Louis},
  year = {2008},
  number = {Mar},
  pages = {117-132},
  url = {http://research.stlouisfed.org/publications/review/08/03/Engemann.pdf}
}
Eyraud, L. and Weber, A. The Challenge of Debt Reduction during Fiscal Consolidation 2013 (13/67)School: International Monetary Fund  techreport URL 
Abstract: Studies suggest that fiscal multipliers are currently high in many advanced economies. One important implication is that fiscal tightening could raise the debt ratio in the short term, as fiscal gains are partly wiped out by the decline in output. Although this effect is not long-lasting and debt eventually declines, it could be an issue if financial markets focus on the short-term behavior of the debt ratio, or if country authorities engage in repeated rounds of tightening in an effort to get the debt ratio to converge to the official target. We discuss whether these problems could be addressed by setting and monitoring debt targets in cyclically-adjusted terms.
BibTeX:
@techreport{Eyraud2013,
  author = {Luc Eyraud and Anke Weber},
  title = {The Challenge of Debt Reduction during Fiscal Consolidation},
  school = {International Monetary Fund},
  year = {2013},
  number = {13/67},
  url = {http://www.imf.org/external/pubs/ft/wp/2013/wp1367.pdf}
}
Eyraud, L. and Wu, T. Playing by the Rules; Reforming Fiscal Governance in Europe 2015 (15/67)School: International Monetary Fund  techreport URL 
Abstract: The paper contributes to the discussions on fiscal governance in Europe. It takes stock of recent reforms, identifies areas for further progress, and discusses a menu of policy options for the medium-term. The issues covered include: (i) the growing complexity of the European framework and ways to simplify it; (ii) the difficulties to measure and implement structural stance indicators; (iii) the challenge of reconciling fiscal sustainability and growth; (iv) the need to enhance coordination in the area of monitoring; and (v) the obstacles to compliance and proposals to strengthen enforcement.
BibTeX:
@techreport{Eyraud2015,
  author = {Luc Eyraud and Tao Wu},
  title = {Playing by the Rules; Reforming Fiscal Governance in Europe},
  school = {International Monetary Fund},
  year = {2015},
  number = {15/67},
  url = {http://www.imf.org/external/pubs/ft/wp/2015/wp1567.pdf}
}
Fair, R.C. Is Fiscal Stimulus a Good Idea? 2012 (1861)School: Cowles Foundation for Research in Economics, Yale University  techreport URL 
Abstract: The results in this paper, using a structural multi-country macroeconometric model, suggest that there is at most a small gain from fiscal stimulus in the form of increased transfer payments or increased tax deductions if the increased debt generated must eventually be paid back. The gain in output and employment on the way up is roughly offset by the loss in output and employment on the way down as the debt from the initial stimulus is paid off. This conclusion is robust to different assumptions about monetary policy. To the extent that there is a gain, the longer one waits to begin paying the debt back the better. Possible caveats regarding the model used are that 1) monetary policy is not powerful enough to keep the economy at full employment, 2) potential output is taken to be exogenous, 3) possible permanent effects on asset prices and animal spirits from a stimulus are not taken into account, and 4) the model does not have the feature that in really bad times the economy might collapse without a stimulus.
BibTeX:
@techreport{Fair2012,
  author = {Ray C. Fair},
  title = {Is Fiscal Stimulus a Good Idea?},
  school = {Cowles Foundation for Research in Economics, Yale University},
  year = {2012},
  number = {1861},
  url = {http://cowles.yale.edu/sites/default/files/files/pub/d18/d1861.pdf}
}
Fatás, A. and Summers, L.H. The Permanent Effects of Fiscal Consolidations 2016 (22374)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: The global financial crisis has permanently lowered the path of GDP in all advanced economies. At the same time, and in response to rising government debt levels, many of these countries have been engaging in fiscal consolidations that have had a negative impact on growth rates. We empirically explore the connections between these two facts by extending to longer horizons the methodology of Blanchard and Leigh (2013) regarding fiscal policy multipliers. Our results provide support for the presence of strong hysteresis effects of fiscal policy. The large size of the effects points in the direction of self-defeating fiscal consolidations as suggested by DeLong and Summers (2012). Attempts to reduce debt via fiscal consolidations have very likely resulted in a higher debt to GDP ratio through their long-term negative impact on output.
BibTeX:
@techreport{Fatas2016,
  author = {Antonio Fatás and Lawrence H. Summers},
  title = {The Permanent Effects of Fiscal Consolidations},
  school = {National Bureau of Economic Research, Inc},
  year = {2016},
  number = {22374},
  url = {http://www.nber.org/papers/w22374.pdf}
}
Forni, L. and Novta, N. Public Employment and Compensation Reform During Times of Fiscal Consolidation 2014 (14/192)School: International Monetary Fund  techreport URL 
Abstract: This paper compiles and compares recent and past measures introduced to contain the public wage bill in a number of emerging and advanced economies to assess their effectiveness in bringing down expenditure in a sustained way. In the aftermath of the Great Recession a number of countries have approved measures on the wage bill as part of fiscal consolidation efforts. These recent episodes are compared to past cases implemented in advanced economies over the period 1979–2009. Findings suggest that public wage bill consolidation episodes pre and post 2009 are similar in many respects. Moreover, typically countries that were able to achieve more sustained reductions in the wage bill have implemented to larger extent structural measures, and/or these measures were accompanied with substantial social dialogue and consensus.
BibTeX:
@techreport{Forni2014,
  author = {Lorenzo Forni and Natalija Novta},
  title = {Public Employment and Compensation Reform During Times of Fiscal Consolidation},
  school = {International Monetary Fund},
  year = {2014},
  number = {14/192},
  url = {http://www.imf.org/external/pubs/cat/longres.aspx?sk=42413}
}
Gavilan, A., de Cos, P.H., Jimeno, J.F. and Rojas, J.A. Fiscal policy, structural reforms and external imbalances: a quantitative evaluation for Spain 2011 (1107)School: Banco de España;Working Papers Homepage  techreport URL 
Abstract: This paper builds a large overlapping generations model of a small open economy featuring imperfect competition in the labor and product markets to understand i) which were the main determinants of the large expansionary phase experienced in Spain from the mid-1990s until the arrival of the global financial crisis in 2007-2008, ii) what role fiscal policy and structural reforms could have played to avoid the build-up of large external imbalance over this period, and iii) how these policies could affect the recovery of economic activity in Spain after the crisis. Our results indicate that falling interest rates and demographic changes were the main drivers of the Spanish expansionary phase. As for the macroeconomic behavior of the Spanish economy after the crisis, our results suggest that a front-loading in fiscal consolidation together with structural reforms that eliminate distortions in the goods and labor markets could make the recovery of economic activity in Spain more successful.
BibTeX:
@techreport{Gavilan2011,
  author = {Angel Gavilan and Pablo Hernández de Cos and Juan F. Jimeno and Juan A. Rojas},
  title = {Fiscal policy, structural reforms and external imbalances: a quantitative evaluation for Spain},
  school = {Banco de España;Working Papers Homepage},
  year = {2011},
  number = {1107},
  url = {http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1107e.pdf}
}
Gechert, S. and Will, H. Fiscal Multipliers: A Meta Regression Analysis 2012 (97-2012)School: IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute  techreport URL 
Abstract: Since the fiscal expansion during the Great Recession 2008-2009 and the current European consolidation and austerity measures, the analysis of fiscal multiplier effects is back on the scientific agenda. The number of empirical studies is growing fast, tackling the issue with manifold model classes, identification strategies, and specifications. While plurality of methods seems to be a good idea to address a complicated issue, the results are far off consensus. We apply meta regression analysis to a set of 89 studies on multiplier effects in order to provide a systematic overview of the different approaches, to derive stylized facts and to separate structural from method-specific effects. We classify studies with respect to type of fiscal impulse, model class, multiplier calculation method and further control variables. Moreover, we analyse subsamples of the model classes in order to evaluate the effects of model-class-specific properties, currently discussed in the literature, such as the influence of central bank reaction functions and liquidity constrained households. As a major result, we find that the reported size of the fiscal multiplier crucially depends on the setting and method chosen. Thus, economic policy consulting based on a certain multiplier study should lay open by how much specification affects the results. Our meta analysis may provide guidance concerning influential factors.
BibTeX:
@techreport{Gechert2012,
  author = {Sebastian Gechert and Henner Will},
  title = {Fiscal Multipliers: A Meta Regression Analysis},
  school = {IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute},
  year = {2012},
  number = {97-2012},
  url = {http://www.boeckler.de/pdf/p_imk_wp_97_2012.pdf}
}
Gechert, S. The multiplier principle, credit-money and time 2012 (34648)School: University Library of Munich, Germany  techreport URL 
Abstract: We analyze the simple fiscal multiplier and extend it in terms of a credit-money framework and in terms of a time dimension, making it applicable to time series data. In order to take care of a credit-money framework, we complement the sources and uses of funds that are available along the multiplier process. In order to tackle the issue of time, we introduce a time component, which captures the time duration of a multiplier round. We argue that both attempts are incomplete on their own, but together they form a new version of the multiplier depending on the time duration of a multiplier period and a leakage that comprises net debt settlement and net accumulation of receivables. While the comparative-static stability condition of the multiplier can be dropped in this framework, our integrated multiplier reveals a dynamic stability condition for the multiplier process. Moreover, the integrated multiplier can be applied to evaluate income effects of transitory stimulus packages for a given time span. Multiplier effects are not calculated via identification of public spending shocks and GDP effects, but via determination of the behavioral parameters.
BibTeX:
@techreport{Gechert2012a,
  author = {Gechert, Sebastian},
  title = {The multiplier principle, credit-money and time},
  school = {University Library of Munich, Germany},
  year = {2012},
  number = {34648},
  url = {https://mpra.ub.uni-muenchen.de/34648/1/MPRA_paper_34648.pdf}
}
Gechert, S. and Mentges, R. What Drives Fiscal Multipliers? The Role of Private Wealth and Debt 2013 (124-2013)School: IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute  techreport URL 
Abstract: We show that fiscal multiplier estimations may be biased by movements in asset and credit markets, as they facilitate spurious correlations of changes in cyclically adjusted revenues and spending with GDP growth via wrong identifications and an omitted variable bias, thus overstating episodes of expansionary consolidations and downplaying contractionary consolidations. When controlling for asset and credit market movements in otherwise standard approaches to identification, we find multipliers to increase on average by 0.3 to 0.6 units. Consolidations are thus more likely to be contractionary and more harmful to growth than expected by some strands of the existing literature.
BibTeX:
@techreport{Gechert2013,
  author = {Sebastian Gechert and Rafael Mentges},
  title = {What Drives Fiscal Multipliers? The Role of Private Wealth and Debt},
  school = {IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute},
  year = {2013},
  number = {124-2013},
  url = {http://www.boeckler.de/pdf/imk_wp_124_2013.pdf}
}
Gechert, S. and Rannenberg, A. Are Fiscal Multipliers Regime-Dependent? A Meta Regression Analysis 2014 (139-2014)School: IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute  techreport URL 
Abstract: We analyze whether estimated multiplier effects are systematically higher if the economy suffers a downturn. For that purpose, we conduct a meta-regression analysis on a unique data set of 98 empirical studies with more than 1800 observations on multiplier effects and control for regime dependence of the multiplier. We find spending multipliers to significantly increase by about 0.6 to 0.8 units during a downturn. Moreover, spending multipliers significantly exceed tax multipliers by about 0.3 units in normal times and even more so in recession regimes. Based on a broad array of empirical evidence, we thus conclude that in order to limit the adverse consequences for growth, fiscal consolidation should take place during the recovery and should be primarily tax-based.
BibTeX:
@techreport{Gechert2014,
  author = {Sebastian Gechert and Ansgar Rannenberg},
  title = {Are Fiscal Multipliers Regime-Dependent? A Meta Regression Analysis},
  school = {IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute},
  year = {2014},
  number = {139-2014},
  url = {http://www.boeckler.de/pdf/v_2015_10_23_gechert.pdf}
}
Giavazzi, F. and Pagano, M. Non-Keynesian Effects of Fiscal Policy Changes: International Evidence and the Swedish Experience 1995 (1284)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: In earlier work we documented two episodes in which a sharp fiscal consolidation was associated with a surprisingly large expansion in private domestic demand. In this paper we draw on further evidence to investigate if and when fiscal policy changes can have such non-Keynesian effects. In the first part of the paper, we analyse cross-country data for 19 OECD countries. In the second part we concentrate on the Swedish fiscal expansion of the early 1990s. The cross-country evidence on private consumption confirms that fiscal policy changes - both contractions and expansions - can have non-Keynesian effects if they are sufficiently large and persistent. It also suggests that these effects can result not only from changes in public consumption, but to some extent also from changes in taxes and transfers. The latter result is also consistent with the Swedish experience, where a decrease in net taxes (with almost no change in public consumption) was associated with a dramatic fall in private domestic demand. Our evidence and that from other studies agree that during the Swedish fiscal expansion of the early 1990s a large negative error should be interpreted, but it is clear that the most obvious candidates (wealth effects and after-tax real interest rate effects) are not sufficient to explain it. This error may reflect a large downward revision of permanent disposable income, which affected the consumption choices of Swedish households over and beyond the negative effects of the drop in real asset prices. We suggest that this downward revision in permanent disposable income may have been triggered, at least partly, by the fiscal expansion of the early 1990s.
BibTeX:
@techreport{Giavazzi1995,
  author = {Giavazzi, Francesco and Pagano, Marco},
  title = {Non-Keynesian Effects of Fiscal Policy Changes: International Evidence and the Swedish Experience},
  school = {C.E.P.R. Discussion Papers},
  year = {1995},
  number = {1284},
  url = {http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1284}
}
Giavazzi, F., Jappelli, T. and Pagano, M. Searching for Non-Keynesian Effects of Fiscal Policy 1998 (136)School: IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University  techreport URL 
Abstract: We search for the circumstances in which the response of national saving to fiscal policy contradicts conventional Keynesian predictions, using data from 18 OECD countries. The data suggest that non-Keynesian effects are associated with large and persistent fiscal impulses. Such responses can be traced to changes in taxes and transfers, more than to changes in government consumption, and are stronger for fiscal contractions than expansions. During large contractions an increase in taxes has no effect on national saving. High or rapidly growing public debt is not a good predictor of non-Keynesian effects. Finally, the composition of the fiscal impulse matters: the non-Keynesian effects of a large fiscal contraction are enhanced when this is carried out primarily by raising taxes.
BibTeX:
@techreport{Giavazzi1998,
  author = {Francesco Giavazzi and Tullio Jappelli and Marco Pagano},
  title = {Searching for Non-Keynesian Effects of Fiscal Policy},
  school = {IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University},
  year = {1998},
  number = {136},
  url = {ftp://ftp.igier.uni-bocconi.it/wp/1998/136.pdf}
}
Goujard, A. Cross-Country Spillovers from Fiscal Consolidations 2013 (1099)School: OECD Publishing  techreport URL 
Abstract: In many OECD countries, government debt reached levels over recent years that call for reduction over the medium to longer term to ensure public finance sustainability. This paper investigates the international transmission of fiscal consolidation shocks via trade flows. Using a measure of exogenous fiscal shocks in export markets, fiscal consolidation spillovers are found to slow domestic growth and decrease employment. When fiscal consolidation efforts are synchronised across partner countries, fiscal policies have large spillover effects on output. Spillovers of fiscal consolidations on growth are found to be initially larger between countries belonging to currency unions, though this larger impact vanishes over the medium term. Larger spillovers of fiscal consolidation coincide with stronger shifts in bilateral trade flows in currency unions in the short term, despite smaller adjustments in relative exchange rates. Spillovers of fiscal consolidation are also found to be more detrimental to domestic growth during economic downturns in export markets.
BibTeX:
@techreport{Goujard2013,
  author = {Antoine Goujard},
  title = {Cross-Country Spillovers from Fiscal Consolidations},
  school = {OECD Publishing},
  year = {2013},
  number = {1099},
  url = {http://dx.doi.org/10.1787/5k3txn1mbw8x-en}
}
Gourinchas, P.-O. and Kose, M.A. Fiscal Policy, Stabilization, and Sustainability 2011 IMF Economic Review
Vol. 59(4), pp. 581-581School: IMF 
techreport URL 
Abstract: No abstract is available for this item.
BibTeX:
@techreport{Gourinchas2011,
  author = {Pierre-Olivier Gourinchas and M Ayhan Kose},
  title = {Fiscal Policy, Stabilization, and Sustainability},
  journal = {IMF Economic Review},
  school = {IMF},
  year = {2011},
  volume = {59},
  number = {4},
  pages = {581-581},
  url = {http://www.palgrave-journals.com/imfer/journal/v59/n4/pdf/imfer201127a.pdf}
}
Guillemette, Y. Fiscal-Consolidation Strategies for Canadian Governments 2010 (818)School: OECD Publishing  techreport URL 
Abstract: Although Canada remains in an advantageous fiscal position relative to many other OECD countries as the global economy recovers from the 2008/09 recession, the deterioration in the country's public finances has been substantial. Years of spending increases above trend economic growth have led to high structural levels of expenditure, and some Canadian governments are now on unsustainable fiscal paths, a diagnosis made starker when taking an even longer-term view that considers the fiscal implications of demographic change. Evidence shows that successful fiscal consolidations tend to rely on spending restraint rather than tax increases. When focused on restraining less productive expenditure, they can also boost economic growth. Fiscal rules can be useful tools in achieving budgetary consolidation, but also as part of the general fiscal framework to limit deficit bias and counteract the tendency shown by some Canadian governments over the past two decades to run pro-cyclical fiscal policies. Canadian governments with large deficits should announce deficit targets on the way to fiscal balance and should consider supporting these targets with spending growth limits. Other governments should also limit spending growth and target reductions in debt-to-GDP ratios, perhaps supported by budget surplus targets. Temporary fiscal stimulus measures should be allowed to expire as planned. To date, the federal and almost all provincial/territorial governments have committed to return to budget balance over the medium term and outlined plans to do so that focus primarily on expenditure restraint. These plans are broadly in line with the recommendations set forth in this paper and should allow Canada to return to budget balance over the medium term. Of crucial importance for the long-term success of fiscal-consolidation and debt-reduction strategies are public backing and transparency. The federal government should continue to support the Parliamentary Budget Office, and provinces should consider establishing similar independent fiscal agencies that can assess compliance relative to objectives and reinforce accountability. This Working Paper relates to the 2010 OECD Economic Review of Canada (www.oecd.org/eco/surveys/Canada).
BibTeX:
@techreport{Guillemette2010,
  author = {Yvan Guillemette},
  title = {Fiscal-Consolidation Strategies for Canadian Governments},
  school = {OECD Publishing},
  year = {2010},
  number = {818},
  url = {http://www.oecd-ilibrary.org/docserver/download/5km36j7nc2g4.pdf?expires=1469198266&id=id&accname=guest&checksum=2F76412261F9754744F7E91B14B8E710}
}
Guillemette, Y. and Stráský, J. Japan's challenging debt dynamics 2015
Vol. 2014School: OECD 
techreport URL 
Abstract: A small simulation model is used to evaluate the contribution that the three arrows of the government's strategy - bold monetary policy to achieve higher inflation, flexible fiscal policy and growth-boosting structural reforms - could make to reversing the rise in Japan's public debt ratio, currently about 230% of GDP. The findings indicate that with fiscal consolidation amounting to around 7.5 percentage points of GDP by 2020, modestly higher growth coming from increased female labour force participation and higher productivity growth, as well as inflation gradually rising to 2% thanks to unconventional monetary policy measures, the debt ratio could be put on a downward trajectory by the end of this decade, although it is likely to remain above 200% of GDP in 2035. Among the many uncertainties surrounding this scenario, the risk of a larger-than-projected increase in interest rates stands prominently and could prevent the turnaround in debt dynamics.
BibTeX:
@techreport{Guillemette2015,
  author = {Yvan Guillemette and Jan Stráský},
  title = {Japan's challenging debt dynamics},
  school = {OECD},
  year = {2015},
  volume = {2014},
  url = {http://www.oecd-ilibrary.org/economics/japan-s-challenging-debt-dynamics_eco_studies-2014-5jxvbssqsvmv}
}
Haug, A.A., Jedrzejowicz, T. and Sznajderska, A. Combining Monetary and Fiscal Policy in an SVAR for a Small Open Economy 2013 (1313)School: University of Otago, Department of Economics  techreport URL 
Abstract: This paper combines a monetary structural vector-autoregression (SVAR)with a fiscal SVAR for Poland. Fiscal foresight, in the form of implementation lags, is accounted for with respect to both discretionary government spending and tax changes. We demonstrate the importance of combining monetary and fiscal transmission mechanisms. However, ignoring fiscal foresight has no statistically significant effects. We calculate an initial government spending multiplier of 0.14, which later peaks at 0.48. The tax multiplier is close to zero. We also find that monetary policy in Poland transmits mainly through the real sector, that is through real GDP and the real exchange rate.
BibTeX:
@techreport{Haug2013,
  author = {Alfred A. Haug and Tomasz Jedrzejowicz and Anna Sznajderska},
  title = {Combining Monetary and Fiscal Policy in an SVAR for a Small Open Economy},
  school = {University of Otago, Department of Economics},
  year = {2013},
  number = {1313},
  url = {http://www.otago.ac.nz/economics/otago111192.pdf}
}
Haug, A. A New Test of Ricardian Equivalence Using the Narrative Record on Tax Changes 2016
Vol. Economics Discussion Papers Series(1607)School: Unicersity Otango 
techreport URL 
BibTeX:
@techreport{Haug2016,
  author = {Haug, Alfred},
  title = {A New Test of Ricardian Equivalence Using the Narrative Record on Tax Changes},
  publisher = {University of Otago},
  school = {Unicersity Otango},
  year = {2016},
  volume = {Economics Discussion Papers Series},
  number = {1607},
  url = {https://ourarchive.otago.ac.nz/bitstream/handle/10523/6662/DP_1607.pdf?sequence=1&isAllowed=y}
}
Hebous, S. and Zimmermann, T. Cross-Border Effects of Fiscal Consolidations: Estimates Based on Narrative Records 2013 (4311)School: CESifo Group Munich  techreport URL 
Abstract: We estimate cross-border spillover effects of fiscal consolidation episodes on output, bilateral trade flows, interest rate, and the exchange rate, employing the new IMF action-based fiscal consolidation data. Results indicate a negative effect of foreign fiscal consolidation policies on domestic output. Regarding the transmission mechanism, our results suggest that fiscal consolidations in foreign economies work their way into the domestic economy by negatively affecting exports. We do not find evidence for an interest rate channel. Trade effects are particularly pronounced for some European countries and are insignificant for others, such as the US and Canada. This is not due to the common currency or to differential specialization in trade.
BibTeX:
@techreport{Hebous2013a,
  author = {Shafik Hebous and Tom Zimmermann},
  title = {Cross-Border Effects of Fiscal Consolidations: Estimates Based on Narrative Records},
  school = {CESifo Group Munich},
  year = {2013},
  number = {4311},
  url = {http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-06/cesifo1_wp4311.pdf}
}
Hebous, S. and Zimmermann, T. Revisiting the narrative approach of estimating tax multipliers 2015 (93)School: Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt  techreport URL 
Abstract: A number of recent studies regress a "narratively" identified measure of a macroeconomic shock directly on an outcome variable. In this note, we argue that this approach can be viewed as the reduced-form regression of an instrumental variable approach in which the narrative time series is used as an instrument for an endogenous series of interest. This motivates evaluating the validity of narrative measures through the lens of a randomized experiment. We apply our framework to four recently constructed narrative measures of tax shocks by Romer and Romer (2010), Cloyne (2013), and Mertens and Ravn (2012). All of them turn out to be weak instruments for observable measures of taxes. After correcting for weak instruments, we find that using any of the considered narrative tax measures as an instrument for cyclically adjusted tax revenues yields tax multiplier estimates that are indistinguishable from zero. We conclude that the literature currently understates the uncertainty associated with quantifying the tax multiplier.
BibTeX:
@techreport{Hebous2015,
  author = {Hebous, Shafik and Zimmermann, Tom},
  title = {Revisiting the narrative approach of estimating tax multipliers},
  school = {Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt},
  year = {2015},
  number = {93},
  url = {https://econstor.eu/bitstream/10419/108875/1/821239732.pdf}
}
Hebous, S. and Weichenrieder, A.J. On deficits and symmetries in a fiscal capacity 2015 (112)School: Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt  techreport URL 
Abstract: There is a growing debate about complementing the European Monetary Union by a more comprehensive fiscal union. Against this background, this paper emphasizes that there is a trade-off in designing a system of fiscal transfers ("fiscal capacity") in a union between members of different size. A system cannot guarantee symmetric treatment of members and simultaneously ensure a balanced budget. We compute hypothetical transfers for the Eurozone members from 2001 to 2012 to illustrate this trade-off. Interestingly, a symmetric system that treats shocks in small and large countries symmetrically would have produced large budgetary surpluses in 2009, the worst year of the financial crisis.
BibTeX:
@techreport{Hebous2015a,
  author = {Hebous, Shafik and Weichenrieder, Alfons J.},
  title = {On deficits and symmetries in a fiscal capacity},
  school = {Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt},
  year = {2015},
  number = {112},
  url = {https://econstor.eu/bitstream/10419/116770/1/834468468.pdf}
}
Hebous, S. and Weichenrieder, A.J. Towards a fiscal union? On the acceptability of a fiscal transfer system in the eurozone 2015 (28)School: Goethe University Frankfurt, Research Center SAFE - Sustainable Architecture for Finance in Europe  techreport URL 
Abstract: There is a large, but yet growing debate about the need to complement the European monetary union with a stronger fiscal union. This paper reviews the potential trade-offs between effectiveness, moral hazard problems, and permanent redistribution. In particular, we contribute to the question of how member states may be willing to enter into a stronger fiscal union if the evolution of this union may imply large redistribution under incomplete contracting. We discuss clawback mechanisms that have been suggested in the literature, but conclude that clawbacks are undesirable, as they would essentially destroy the insurance value of a fiscal union. Instead, we propose that a clearly defined exit option as a guarantee against involuntary redistribution can make entry into a stronger fiscal union less risky and hence more attractive for member states.
BibTeX:
@techreport{Hebous2015b,
  author = {Hebous, Shafik and Weichenrieder, Alfons J.},
  title = {Towards a fiscal union? On the acceptability of a fiscal transfer system in the eurozone},
  school = {Goethe University Frankfurt, Research Center SAFE - Sustainable Architecture for Finance in Europe},
  year = {2015},
  number = {28},
  url = {https://econstor.eu/bitstream/10419/116773/1/834467704.pdf}
}
Hebous, S. and Zimmermann, T. Can Government Demand Stimulate Private Investment? Evidence from U.S. Federal Procurement 2016 (16/60)School: International Monetary Fund  techreport URL 
Abstract: We study the effects of federal purchases on firms’ investment using a novel panel dataset that combines federal procurement contracts in the United States with key financial firm-level information. We find that 1 dollar of federal spending increases firms’ capital investment by 7 to 11 cents. The average effect masks heterogeneity: Effects are stronger for firms that face financing constraints and they are close to 0 for unconstrained firms. In line with the financial accelerator model, our findings indicate that the effect of government purchases works through easing firms’ access to external borrowing. Furthermore, industry-level analysis suggests that that the increase in investment at the firm level translates into an industry-wide effect without crowding-out capital investment of other firms in the same industry.
BibTeX:
@techreport{Hebous2016,
  author = {Shafik Hebous and Tom Zimmermann},
  title = {Can Government Demand Stimulate Private Investment? Evidence from U.S. Federal Procurement},
  school = {International Monetary Fund},
  year = {2016},
  number = {16/60},
  url = {http://www.imf.org/external/pubs/ft/wp/2016/wp1660.pdf}
}
Hills, T.S. and Nakata, T. Fiscal Multipliers at the Zero Lower Bound: The Role of Policy Inertia 2014 (2014-107)School: Board of Governors of the Federal Reserve System (U.S.)  techreport URL 
Abstract: The presence of the lagged shadow policy rate in the interest rate feedback rule reduces the government spending multiplier nontrivially when the policy rate is constrained at the zero lower bound (ZLB). In the economy with policy inertia, increased inflation and output due to higher government spending during a recession speed up the return of the policy rate to the steady state after the recession ends. This in turn dampens the expansionary effects of the government spending during the recession via expectations. In our baseline calibration, the output multiplier at the ZLB is 2.5 when the weight on the lagged shadow rate is zero, and 1.1 when the weight is 0.9.
BibTeX:
@techreport{Hills2014,
  author = {Hills, Timothy S. and Nakata, Taisuke},
  title = {Fiscal Multipliers at the Zero Lower Bound: The Role of Policy Inertia},
  school = {Board of Governors of the Federal Reserve System (U.S.)},
  year = {2014},
  number = {2014-107},
  url = {http://www.federalreserve.gov/econresdata/feds/2014/files/2014107pap.pdf}
}
Huidrom, R., Kose, A. and Ohnsorge, F. Challenges of Fiscal Policy in Emerging and Developing Economies 2016 (11347)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: This paper presents a systematic analysis of the availability and use of fiscal space in emerging and developing economies. These economies built fiscal space in the run-up to the Great Recession of 2008.09, which was then used for stimulus. This reflects a more general trend over the past three decades, where availability of fiscal space has been associated with increasingly countercyclical (or less procyclical) fiscal policy. However, fiscal space has shrunk since the Great Recession and has not returned to pre-crisis levels. Emerging and developing economies face downside risks to growth and prospects of rising financing costs. In the event that these cause a sharp cyclical slowdown, policymakers may need to employ fiscal policy as a possible tool for stimulus. An important prerequisite for fiscal policy to be effective is that these economies have the necessary fiscal space to employ countercyclical policies. Over the medium-term, credible and well-designed institutional arrangements, such as fiscal rules, stabilization funds, and medium-term expenditure frameworks, can help build fiscal space and strengthen policy outcomes.
BibTeX:
@techreport{Huidrom2016,
  author = {Huidrom, Raju and Kose, Ayhan and Ohnsorge, Franziska},
  title = {Challenges of Fiscal Policy in Emerging and Developing Economies},
  school = {C.E.P.R. Discussion Papers},
  year = {2016},
  number = {11347},
  url = {http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11347}
}
Huidrom, R., Kose, M.A., Lim, J.J. and Ohnsorge, F.L. Do fiscal multipliers depend on fiscal positions? 2016 (2016-35)School: Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University  techreport URL 
Abstract: This paper analyzes the relationship between fiscal multipliers and fiscal positions of governments using an Interactive Panel Vector Auto Regression model and a large dataset of advanced and developing economies. Our methodology permits us to trace the endogenous relationship between fiscal multipliers and fiscal positions while maintaining enough degrees of freedom to draw sharp inferences. We report three major results. First, the fiscal multipliers depend on fiscal positions: the multipliers tend to be larger when fiscal positions are strong (i.e. when government debt and deficits are low) than weak. For instance, the long run multiplier can be as large as unity when fiscal position is strong, while it can be negative when the fiscal position is weak. Second, these effects are separate and distinct from the impact of the business cycle on the fiscal multiplier. Third, the state-dependent effects of the fiscal position on multipliers is attributable to two factors: an interest rate channel through which higher borrowing costs, due to investors'increased perception of credit risks when stimulus is implemented from a weak initial fiscal position, crowd out private investment; and, a Ricardian channel through which households reduce consumption in anticipation of future fiscal adjustments.
BibTeX:
@techreport{Huidrom2016a,
  author = {Raju Huidrom and M. Ayhan Kose and Jamus J. Lim and Franziska L. Ohnsorge},
  title = {Do fiscal multipliers depend on fiscal positions?},
  school = {Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University},
  year = {2016},
  number = {2016-35},
  url = {https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2016-06/35_2016_huidrom_kose_lim_ohnsorge.pdf}
}
Jalil, A. Comparing Tax and Spending Multipliers: It's All About Controlling for Monetary Policy 2012 Available at SSRNSchool: Occidental College  techreport URL 
Abstract: This paper derives empirical estimates for tax and spending multipliers. To deal with endogeneity concerns, I employ a large sample of fiscal consolidations identified through the narrative approach. To control for monetary policy, I study the output effects of fiscal consolidations in countries where monetary authorities are constrained in their ability to counteract shocks because they are in either a monetary union (and hence, lack an independent central bank) or a liquidity trap. My results suggest that for fiscal consolidations, the tax multiplier is larger than the spending multiplier. My estimates indicate that whereas the tax multiplier is roughly 3 - similar to the recent estimates derived by Romer and Romer (2010), the spending multiplier is close to zero. A number of caveats accompany these results, however.
BibTeX:
@techreport{Jalil2012,
  author = {Jalil, Andrew},
  title = {Comparing Tax and Spending Multipliers: It's All About Controlling for Monetary Policy},
  journal = {Available at SSRN},
  school = {Occidental College},
  year = {2012},
  url = {http://poseidon01.ssrn.com/delivery.php?ID=149097083081120111112085111120127091104014059082060018071001090023117028118117002064117119051059021051011086104011121001088020020070011051015027000008064028109101010062078052086013099096120080023082088113067120109007103011104013024092119100125125087087&EXT=pdf}
}
Kirchner, M., Cimadomo, J. and Hauptmeier, S. Transmission of government spending shocks in the euro area: Time variation and driving forces 2010 (1219)School: European Central Bank  techreport URL 
Abstract: This paper provides new evidence on the effects of government spending shocks and the fiscal transmission mechanism in the euro area for the period 1980-2008. Our contribution is two-fold. First, we investigate changes in the macroeconomic impact of government spending shocks using time-varying structural VAR techniques. The results show that the short-run effectiveness of government spending in stabilizing real GDP and private consumption has increased until the end-1980s but it has decreased thereafter. Moreover, government spending multipliers at longer horizons have declined substantially over the sample period. We also observe a weaker response of real wages and a stronger response of the nominal interest rate to spending shocks. Second, we provide econometric evidence on the driving forces behind the observed time variation of spending multipliers. We find that a higher ratio of credit to households over GDP, a smaller share of government investment and a larger share of public wages over total government spending have led to decreasing contemporaneous multipliers. At the same time, our results indicate that higher government debt-to-GDP ratios have negatively affected long-term multipliers. JEL Classification: C32, E62, H30, H50
BibTeX:
@techreport{Kirchner2010,
  author = {Kirchner, Markus and Cimadomo, Jacopo and Hauptmeier, Sebastian},
  title = {Transmission of government spending shocks in the euro area: Time variation and driving forces},
  school = {European Central Bank},
  year = {2010},
  number = {1219},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1219.pdf}
}
Klemm, A.D. Fiscal Policy in Latin America over the Cycle 2014 (14/59)School: International Monetary Fund  techreport URL 
Abstract: This paper provides an analysis of the cyclical stance of fiscal policy in Latin America. Its contributions include developing a new measure of the cyclicality of fiscal policy, careful analysis of the statistical significance of results, and accounting for the effect of commodity prices on fiscal balances. The new cyclicality measure takes into account both discretionary policy action and automatic stabilizers, but excludes additional revenues that are due to applying an unchanged average tax rate to nominal GDP in excess of potential. The paper finds that fiscal policy has been procyclical on average in Latin America, but counter or acyclical in advanced economies. Country-specific results are mostly insignificant, except in a few cases where policy is clearly procyclical. For some countries (Brazil, Chile, Colombia, El Salvador, and Mexico), there is evidence of a recent move toward more countercyclical policies.
BibTeX:
@techreport{Klemm2014,
  author = {Alexander D Klemm},
  title = {Fiscal Policy in Latin America over the Cycle},
  school = {International Monetary Fund},
  year = {2014},
  number = {14/59},
  url = {http://www.imf.org/external/pubs/ft/wp/2014/wp1459.pdf}
}
Kung, H., Morales, G. and Bianchi, F. Monetary/Fiscal Policy Mix and Asset Prices 2015 (1224)School: Society for Economic Dynamics  techreport URL 
Abstract: This paper estimates monetary and fiscal policy rules using a New Keynesian model that allows for changes in the monetary/fiscal policy mix, generates a sizeable bond risk premia, and takes into account the effects of the zero lower bound.
BibTeX:
@techreport{Kung2015,
  author = {Howard Kung and Gonzalo Morales and Francesco Bianchi},
  title = {Monetary/Fiscal Policy Mix and Asset Prices},
  school = {Society for Economic Dynamics},
  year = {2015},
  number = {1224},
  url = {https://economicdynamics.org/meetpapers/2015/paper_1224.pdf}
}
Leeper, E.M., Walker, T.B. and Yang, S.-C.S. Fiscal Foresight: Analytics and Econometrics 2008 (14028)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: Fiscal foresight---the phenomenon that legislative and implementation lags ensure that private agents receive clear signals about the tax rates they face in the future---is intrinsic to the tax policy process. This paper develops an analytical framework to study the econometric implications of fiscal foresight. Simple theoretical examples show that foresight produces equilibrium time series with a non-invertible moving average component, which misaligns the agents' and the econometrician's information sets in estimated VARs. Economically meaningful shocks to taxes, therefore, cannot be extracted from statistical innovations in conventional ways. Econometric analyses that fail to align agents' and the econometrician's information sets can produce distorted inferences about the effects of tax policies. Because non-invertibility arises as a natural outgrowth of the fact that agents' optimal decisions discount future tax obligations, it is likely to be endemic to the study of fiscal policy. In light of the implications of the analytical framework, we evaluate two existing empirical approaches to quantifying the impacts of fiscal foresight. The paper also offers a formal interpretation of the narrative approach to identifying fiscal policy.
BibTeX:
@techreport{Leeper2008,
  author = {Eric M. Leeper and Todd B. Walker and Shu-Chun Susan Yang},
  title = {Fiscal Foresight: Analytics and Econometrics},
  school = {National Bureau of Economic Research, Inc},
  year = {2008},
  number = {14028},
  url = {http://www.nber.org/papers/w14028.pdf}
}
Leeper, E.M. Monetary science, fiscal alchemy 2010 Proceedings - Economic Policy Symposium - Jackson Hole, pp. 361-434School: Federal Reserve Bank of Kansas City  techreport URL 
Abstract: Monetary policy decisions tend to be based on systematic analysis of alternative policy choices and their associated macroeconomic impacts: this is science. Fiscal policy choices, in contrast, spring from unsystematic speculation, grounded more in politics than economics: this is alchemy. In normal times, fiscal alchemy poses no insurmountable problems for monetary policy because fiscal expectations can be extrapolated from past fiscal behavior. But normal times may be coming to an end: aging populations are causing promised government old-age benefits to grow relentlessly and many governments have no plans for financing the benefits. In this era of fiscal stress, fiscal expectations are unanchored and fiscal alchemy creates unnecessary uncertainty and can undermine the ability of monetary policy to control inflation and influence real economic activity in the usual ways.
BibTeX:
@techreport{Leeper2010a,
  author = {Eric M. Leeper},
  title = {Monetary science, fiscal alchemy},
  journal = {Proceedings - Economic Policy Symposium - Jackson Hole},
  school = {Federal Reserve Bank of Kansas City},
  year = {2010},
  pages = {361-434},
  url = {https://www.kansascityfed.org/publicat/sympos/2010/Leeper_final.pdf}
}
Leeper, E.M., Traum, N. and Walker, T.B. Clearing Up the Fiscal Multiplier Morass 2015 (2015-013 Classification-C)School: Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington  techreport URL 
Abstract: We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes - about 1.4 on impact - but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal - means of 1.9 versus 0.7 in present value.
BibTeX:
@techreport{Leeper2015,
  author = {Eric M. Leeper and Nora Traum and Todd B. Walker},
  title = {Clearing Up the Fiscal Multiplier Morass},
  school = {Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington},
  year = {2015},
  number = {2015-013 Classification-C},
  url = {http://www.iub.edu/ caepr/RePEc/PDF/2015/CAEPR2015-013.pdf}
}
Leigh, D., Pescatori, A. and Guajardo, J. Expansionary Austerity New International Evidence 2011 (11/158)School: International Monetary Fund  techreport URL 
Abstract: This paper investigates the short-term effects of fiscal consolidation on economic activity in OECD economies. We examine the historical record, including Budget Speeches and IMFdocuments, to identify changes in fiscal policy motivated by a desire to reduce the budget deficit and not by responding to prospective economic conditions. Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP. By contrast, estimates based on conventional measures of the fiscal policy stance used in the literature support the expansionary fiscal contractions hypothesis but appear to be biased toward overstating expansionary effects.
BibTeX:
@techreport{Leigh2011,
  author = {Daniel Leigh and Andrea Pescatori and Jaime Guajardo},
  title = {Expansionary Austerity New International Evidence},
  school = {International Monetary Fund},
  year = {2011},
  number = {11/158},
  url = {http://www.imf.org/external/pubs/ft/wp/2011/wp11158.pdf}
}
Lemoine, M. and Lindé, J. Fiscal Consolidation Under Imperfect Credibility 2016 (322)School: Sveriges Riksbank (Central Bank of Sweden)  techreport URL 
Abstract: This paper examines the effects of expenditure-based fiscal consolidation when credibility as to whether the cuts will be long-lasting is imperfect. We contrast the impact limited credibility has when the consolidating country has the means to tailor mon- etary policy to its own needs, with the impact when the country is a small member of a currency union with a negligible effect on interest rates and on nominal exchange rates of the currency union. We find two key results. First, in the case of an independ- ent monetary policy, the adverse impact of limited credibility is relatively small, and consolidation can be expected to reduce government debt at a relatively low output cost given that monetary policy provides more accommodation than it would under perfect credibility. Second, the lack of monetary accommodation under currency union membership implies that the output cost may be significantly larger, and that progress in reducing government debt in the short and medium term may be limited under imperfect credibility.
BibTeX:
@techreport{Lemoine2016,
  author = {Lemoine, Matthieu and Lindé, Jesper},
  title = {Fiscal Consolidation Under Imperfect Credibility},
  school = {Sveriges Riksbank (Central Bank of Sweden)},
  year = {2016},
  number = {322},
  url = {http://www.riksbank.se/Documents/Rapporter/Working_papers/2016/rap_wp322_160512.pdf}
}
Lindé, J. Fiscal Policy and the Yield Curve in a Small Open Economy 1998 (220)School: Stockholm School of Economics  techreport URL 
Abstract: This paper contains an empirical investigation of the effects of fiscal policy on the yield curve based on a conventional stochastic macro model designed for a small open economy. The empirical investigation undertaken utilizes data for Sweden, a country which has experienced very large fluctuations in the government budget deficits and in the short- and long-term nominal interest rates, thus providing a better empirical test than previous studies. According to the empirical results, larger budget deficits spell higher interest rates, as posited by conventional macroeconomic theory.
BibTeX:
@techreport{Linde1998,
  author = {Lindé, Jesper},
  title = {Fiscal Policy and the Yield Curve in a Small Open Economy},
  school = {Stockholm School of Economics},
  year = {1998},
  number = {220},
  url = {http://swopec.hhs.se/hastef/papers/hastef0220.rev.pdf}
}
Ludvigson, S.C., Ma, S. and Ng, S. Uncertainty and Business Cycles: Exogenous Impulse or Endogenous Response? 2015 School: National Bureau of Economic Research  techreport URL 
Abstract: Uncertainty about the future rises in recessions. But is uncertainty a source of business cycle fluctuations or an endogenous response to them, and does the type of uncertainty matter? Answer: we find that sharply higher uncertainty about real economic activity in recessions is fully an endogenous response to other shocks that cause business cycle fluctuations, while uncertainty about financial markets is a likely source of the fluctuations. Financial market uncertainty has quantitatively large negative consequences for several measures of real activity including employment, production, and orders. Such are the main conclusions drawn from estimation of three-variable structural vector autoregressions. To establish causal effects, we propose an iterative projection IV ( IPIV) approach to construct external instruments that are valid under credible interpretations of the structural shocks.
BibTeX:
@techreport{Ludvigson2015,
  author = {Ludvigson, Sydney C and Ma, Sai and Ng, Serena},
  title = {Uncertainty and Business Cycles: Exogenous Impulse or Endogenous Response?},
  school = {National Bureau of Economic Research},
  year = {2015},
  url = {http://www.nber.org/papers/w21803.pdf}
}
Matthes, C. and Barnichon, R. Measuring the Non-Linear Effects of Monetary Policy 2015 (49)School: Society for Economic Dynamics  techreport URL 
Abstract: This paper proposes a method to identify the non-linear effects of structural shocks by using Gaussian basis functions to parametrize impulse response functions. We apply our approach to monetary policy and find that the effect of a monetary intervention depends strongly on (i) the sign of the intervention, (ii) the size of the intervention, and (iii) the state of the business cycle at the time of the intervention. A contractionary policy has a strong adverse effect on output, much stronger than linear estimates suggest, but an expansionary policy has, on average, no significant effect on output. An expansionary policy can have some expansionary effect on output, but only if the intervention is large and during a recession. Even so, a contractionary policy is always more potent than its expansionary counterpart.
BibTeX:
@techreport{Matthes2015,
  author = {Christian Matthes and Regis Barnichon},
  title = {Measuring the Non-Linear Effects of Monetary Policy},
  school = {Society for Economic Dynamics},
  year = {2015},
  number = {49},
  url = {https://economicdynamics.org/meetpapers/2015/paper_49.pdf}
}
Mauro, P., Horton, M.A. and Kumar, M.S. The State of Public Finances; A Cross-Country Fiscal Monitor 2009 (2009/21)School: International Monetary Fund  techreport URL 
Abstract: This Cross-Country Fiscal Monitor of the IMF's Fiscal Affairs Department focuses on the policy response to the global crisis, covering macrofiscal indicators and factors affecting them, measures to support financial and other sectors, effects of fiscal policy on the real economy, evolution of market indicators of fiscal risk, and actions undertaken by countries to ensure medium-term fiscal solvency.
BibTeX:
@techreport{Mauro2009,
  author = {Paolo Mauro and Mark A Horton and Manmohan S. Kumar},
  title = {The State of Public Finances; A Cross-Country Fiscal Monitor},
  school = {International Monetary Fund},
  year = {2009},
  number = {2009/21},
  url = {http://www.imf.org/external/pubs/ft/spn/2009/spn0921.pdf}
}
Mauro, P. and Zilinsky, J. Fiscal Tightening and Economic Growth: Exploring Cross-Country Correlations 2015 (PB15-15)School: Peterson Institute for International Economics  techreport URL 
Abstract: The global financial and economic crisis that began in 2008 has rekindled the debate on the impact of fiscal policy on economic growth. At the outset of the crisis the focus�particularly in the United States�was on whether fiscal stimulus (an expansion in the fiscal deficit) boosts economic growth. Since 2011 or so, with the depth of the crisis becoming more severe in some European countries and Greece in particular, the emphasis of the debate has shifted to whether fiscal adjustment (a reduction in the fiscal deficit) curtails economic growth. Public discourse has been heavily influenced by simple charts analyzing the correlations between measures of fiscal �austerity� and economic growth for small samples of countries over limited time periods. Mauro and Zilinsky analyze the correlations in the data starting from the simplest and gradually building up, in a step-by-step, transparent manner, to multivariate regressions based on various samples of countries for different periods. The results show that simple correlations are no longer significant when considering slightly longer sample periods and omitting outliers, like Greece, from the sample. In multivariate regressions using broader samples, a tightening of fiscal policy is significantly associated with lower economic growth only in some specifications and estimation samples. On the whole, the data offer partial support to the notion that fiscal choices and output growth are correlated.
BibTeX:
@techreport{Mauro2015a,
  author = {Paolo Mauro and Jan Zilinsky},
  title = {Fiscal Tightening and Economic Growth: Exploring Cross-Country Correlations},
  school = {Peterson Institute for International Economics},
  year = {2015},
  number = {PB15-15},
  url = {http://www.piie.com/publications/pb/pb15-15.pdf}
}
Mauro, P. and Zilinsky, J. Reducing Government Debt Ratios in an Era of Low Growth 2016 (PB16-10)School: Peterson Institute for International Economics  techreport URL 
Abstract: Almost a decade after the onset of the global crisis, government debt-to-GDP ratios in the advanced economies have stabilized well above their precrisis levels. Living with high debt is living dangerously: When government debt is large, an increase in interest rates causes a sizable rise in the cost of debt service and therefore in the risk of financial crisis brought about by an interest rate-debt spiral. Reducing high debt ratios poses a daunting challenge, because the range of options for reducing debt is more limited than it once was and economic growth in the next decade is expected to be lower - as a result of population aging and the lingering effects of the crisis - than it was before the global crisis. Declines in the long-run economic growth rate drive increases in the government debt-to-GDP ratios and lead to fiscal crises, including defaults. Past studies have underestimated - in tone, if not necessarily in substance - the role of economic growth in determining the path of debt ratios. This Policy Brief proposes an extended accounting approach that fully recognizes the importance of economic growth in this regard, by keeping track of the impact of growth on the primary fiscal surplus. It concludes that a gradual but sustained fiscal adjustment through expenditure cuts and revenue increases is the most appropriate means of reducing the chances of debt crisis in the coming decade.
BibTeX:
@techreport{Mauro2016,
  author = {Paolo Mauro and Jan Zilinsky},
  title = {Reducing Government Debt Ratios in an Era of Low Growth},
  school = {Peterson Institute for International Economics},
  year = {2016},
  number = {PB16-10},
  url = {https://piie.com/publications/policy-briefs/reducing-government-debt-ratios-era-low-growth}
}
Mertens, K. and Ravn, M.O. The Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks: Theory and Empirical Evidence 2008 (6673)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: We provide empirical evidence on the effects of tax liability changes in the United States. We make a distinction between "surprise" and "anticipated" tax shocks. Surprise tax cuts give rise to a large boom in the economy. Anticipated tax liability tax cuts are instead associated with a contraction in output, investment and hours worked prior to their implementation. After their implementation, anticipated tax liability cuts lead to an economic expansion. We build a DSGE model with changes in tax rates that may be anticipated or not, estimate key parameters using a simulation estimator and show that it can account for the main features of the data. We argue that tax shocks are empirically important for U.S. business cycles and that the Reagan tax cut, which was largely anticipated, was a main factor behind the early 1980�s recession.
BibTeX:
@techreport{Mertens2008,
  author = {Mertens, Karel and Ravn, Morten O},
  title = {The Aggregate Effects of Anticipated and Unanticipated U.S. Tax Policy Shocks: Theory and Empirical Evidence},
  school = {C.E.P.R. Discussion Papers},
  year = {2008},
  number = {6673},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=6673}
}
Mueller, G. and Corsetti, G. International Dimensions of Fiscal Policy Transmission 2007 (726)School: Society for Economic Dynamics  techreport URL 
Abstract: No abstract is available for this item.
BibTeX:
@techreport{Mueller2007,
  author = {Gernot Mueller and Giancarlo Corsetti},
  title = {International Dimensions of Fiscal Policy Transmission},
  school = {Society for Economic Dynamics},
  year = {2007},
  number = {726},
  url = {https://economicdynamics.org/meetpapers/2007/paper_726.pdf}
}
Muir, D. and Weber, A. Fiscal Multipliers in Bulgaria; Low But Still Relevant 2013 (13/49)School: International Monetary Fund  techreport URL 
Abstract: With fiscal adjustment proceeding quickly in Bulgaria and given the weak economic growth environment, there is keen interest in making the budget composition more growth friendly. This paper quantifies the short-term impact of fiscal policy on economic activity in Bulgaria using econometric and model-based approaches. While fiscal multipliers have been modest in the past, as can be expected in a small open emerging economy, the effect on output is not independent of the speed of adjustment and the specific consolidation measures used. The impact of fiscal policy on economic activity is larger in downturns than in expansions and capital spending and direct taxes are associated with the largest effects on output, while non-targeted government transfers and indirect taxes are associated with a smaller impact. The results suggest that increased capital spending financed by higher indirect tax revenue collections through base broadening has sizeable growth effects over the medium and long-term.
BibTeX:
@techreport{Muir2013,
  author = {Dirk Muir and Anke Weber},
  title = {Fiscal Multipliers in Bulgaria; Low But Still Relevant},
  school = {International Monetary Fund},
  year = {2013},
  number = {13/49},
  url = {http://www.imf.org/external/pubs/ft/wp/2013/wp1349.pdf}
}
Nakata, T. Optimal Government Spending at the Zero Bound: Nonlinear and Non-Ricardian Analysis 2011 (831)School: Society for Economic Dynamics  techreport URL 
Abstract: This paper characterizes optimal government spending when monetary policy is constrained by the zero lower bound under a variety of assumptions about a set of fiscal instruments available to finance government spending. The private sector of the model is given by a standard New Keynesian model. In response to a large and persistent time-preference shock, government chooses a sequence of nominal interest rate and government spending, which can be financed by either lump-sum tax, a mix of labor income tax and debt, or a mix of consumption tax and debt. There are four main findings. First, optimal government spending policy is characterized by an initial expansion followed by a sharp reduction during the period of zero nominal interest rates. Second, optimal dynamics of debt and primary balance depend on the available distortionary tax and the initial level of debt. Third, welfare gain of having government spending as an additional policy instrument depends importantly on the available distortionary tax, but is generally much smaller than welfare gain of having debt instrument or distortionary tax. Finally, welfare gains of various fiscal instruments are larger in the economy with larger initial debt.
BibTeX:
@techreport{Nakata2011,
  author = {Taisuke Nakata},
  title = {Optimal Government Spending at the Zero Bound: Nonlinear and Non-Ricardian Analysis},
  school = {Society for Economic Dynamics},
  year = {2011},
  number = {831},
  url = {https://economicdynamics.org/meetpapers/2011/paper_831.pdf}
}
Nakata, T. Optimal fiscal and monetary policy with occasionally binding zero bound constraints 2013 (2013-40)School: Board of Governors of the Federal Reserve System (U.S.)  techreport URL 
Abstract: This paper studies optimal government spending and monetary policy when the nominal interest rate is subject to the zero lower bound constraint in a stochastic New Keynesian economy. I find that the government chooses to increase its spending when at the zero lower bound by a substantially larger amount in the stochastic environment than it would in the deterministic environment. The presence of uncertainty creates a unique time-consistency problem if the steady-state is inefficient. Although access to government spending policy increases welfare in the face of a large deflationary shock, it decreases welfare during normal times as the government reduces the nominal interest rate less aggressively before reaching the zero lower bound
BibTeX:
@techreport{Nakata2013,
  author = {Taisuke Nakata},
  title = {Optimal fiscal and monetary policy with occasionally binding zero bound constraints},
  school = {Board of Governors of the Federal Reserve System (U.S.)},
  year = {2013},
  number = {2013-40},
  url = {http://www.federalreserve.gov/pubs/feds/2013/201340/201340pap.pdf}
}
Nakata, T. Uncertainty at the zero lower bound 2013 (2013-09)School: Board of Governors of the Federal Reserve System (U.S.)  techreport URL 
Abstract: This paper examines how the presence of uncertainty alters allocations and prices when the nominal interest rate is constrained by the zero lower bound. I conduct the analysis using a standard New Keynesian model in which the nominal interest rate is determined according to a truncated Taylor rule. I find that an increase in the variance of shocks to the discount factor process reduces consumption, inflation, and output by a substantially larger amount when the zero lower bound is binding than when it is not. Due to the zero lower bound constraint, policy functions for the real interest rates and the marginal costs of production are highly convex and concave, respectively. As a result, a mean-preserving spread in the shock distribution increases the expectation of future real interest rates and decreases the expectation of future real marginal costs, which lead forward-looking households and firms to reduce consumption and set lower prices today. The more flexible prices are, the larger the effects of uncertainty are at the zero lower bound.
BibTeX:
@techreport{Nakata2013a,
  author = {Taisuke Nakata},
  title = {Uncertainty at the zero lower bound},
  school = {Board of Governors of the Federal Reserve System (U.S.)},
  year = {2013},
  number = {2013-09},
  url = {http://www.federalreserve.gov/pubs/feds/2013/201309/201309pap.pdf}
}
Nakata, T. Optimal Government Spending at the Zero Lower Bound: A Non-Ricardian Analysis 2015 (2015-38)School: Board of Governors of the Federal Reserve System (U.S.)  techreport URL 
Abstract: This paper analyzes the implications of distortionary taxation and debt financing for optimal government spending policy in a sticky-price economy where the nominal interest rate is subject to the zero lower bound constraint. Regardless of the type of tax available and the initial debt level, optimal government spending policy in a recession is characterized by an initial increase followed by a reduction below, and an eventual return to, the steady state. The magnitude of variations in the government spending as well as their welfare implications depend importantly on the available tax instrument and the initial debt level.
BibTeX:
@techreport{Nakata2015,
  author = {Nakata, Taisuke},
  title = {Optimal Government Spending at the Zero Lower Bound: A Non-Ricardian Analysis},
  school = {Board of Governors of the Federal Reserve System (U.S.)},
  year = {2015},
  number = {2015-38},
  url = {http://www.federalreserve.gov/econresdata/feds/2015/files/2015038pap.pdf}
}
Pain, N., Lewis, C., Dang, T.-T., Jin, Y. and Richardson, P. OECD Forecasts During and After the Financial Crisis: A Post Mortem 2014 (1107)School: OECD Publishing  techreport URL 
Abstract: This paper assesses the OECD's projections for GDP growth and inflation during the global financial crisis and recovery, focussing on lessons that can be learned. The projections repeatedly over-estimated growth, failing to anticipate the extent of the slowdown and later the weak pace of the recovery - errors made by many other forecasters. At the same time, inflation was stronger than expected on average. Analysis of the growth errors shows that the OECD projections in the crisis years were larger in countries with more international trade openness and greater presence of foreign banks. In the recovery, there is little evidence that an underestimate of the impact of fiscal consolidation contributed significantly to forecast errors. Instead, the repeated conditioning assumption that the euro area crisis would stabilise or ease played an important role, with growth weaker than projected in European countries where bond spreads were higher than had been assumed. But placing these errors in a historical context illustrates that the errors were not without precedent: similar-sized errors were made in the first oil price shock of the 1970s. In response to the challenges encountered in forecasting in recent years and the lessons learnt, the OECD and other international organisations have sought to improve their forecasting techniques and procedures, to improve their ability to monitor near-term developments and to better account for international linkages and financial market developments.
BibTeX:
@techreport{Pain2014,
  author = {Nigel Pain and Christine Lewis and Thai-Thanh Dang and Yosuke Jin and Pete Richardson},
  title = {OECD Forecasts During and After the Financial Crisis: A Post Mortem},
  school = {OECD Publishing},
  year = {2014},
  number = {1107},
  url = {http://www.oecd-ilibrary.org/docserver/download/5jz73l1qw1s1.pdf?expires=1469193588&id=id&accname=guest&checksum=E36274F6F3F2BE55BD9DFC71C4F1AB1B}
}
Pereira, M.C. Empirical evidence on the stabilizing role of fiscal and monetary policies in the US 2008 (17474)School: University Library of Munich, Germany  techreport URL 
Abstract: I apply SVAR tools and counterfactual simulation techniques to study the (de)stabilizing role of monetary and fiscal policies in the US, using quarterly data from 1955 to 2005. Monetary and fiscal disturbances contributed much less to output volatility in the second part of the sample. This result stems from their smaller impact and, to a lesser extent, from a decline in the respective variance. Systematic taxes net of transfers were the most important stabilizing force in the course of postwar recessions until the eighties. Monetary policy had a comparatively smaller role in offsetting the downturns in activity at those episodes. Net taxes have, however, suffered a marked lost of effectiveness in recent decades.
BibTeX:
@techreport{Pereira2008,
  author = {Pereira, Manuel C},
  title = {Empirical evidence on the stabilizing role of fiscal and monetary policies in the US},
  school = {University Library of Munich, Germany},
  year = {2008},
  number = {17474},
  url = {https://mpra.ub.uni-muenchen.de/19675/1/MPRA_paper_19675.pdf}
}
Pereira, M.C. A new measure of fiscal shocks based on budget forecasts and its implications 2009 (17475)School: University Library of Munich, Germany  techreport URL 
Abstract: This paper develops a new measure of US fiscal policy shocks that intends to avoid the anticipation problem affecting conventional measures, being also arguably free from endogeneity. The shocks are intended to capture changes to the component of anticipated fiscal policy that is exogenous to economic developments. Key economic variables such as output and interest rates respond quickly and significantly to a realization of the estimated shock and, in the first part of the sample, 1969-1988, in a way consistent with the Keynesian prior. In contrast, over the period 1989-2008 the effects are at odds with that prior, with fiscal loosening producing contractionary impacts.
BibTeX:
@techreport{Pereira2009,
  author = {Pereira, Manuel C},
  title = {A new measure of fiscal shocks based on budget forecasts and its implications},
  school = {University Library of Munich, Germany},
  year = {2009},
  number = {17475},
  url = {https://mpra.ub.uni-muenchen.de/17475/1/MPRA_paper_17475.pdf}
}
Pereira, M.C. Revisiting the effectiveness of monetary and fiscal policy in the US, measured on the basis of structural VARs 2012 Economic Bulletin and Financial Stability Report ArticlesSchool: Banco De Portugal  techreport URL 
Abstract: No abstract is available for this item.
BibTeX:
@techreport{Pereira2012,
  author = {Manuel Coutinho Pereira},
  title = {Revisiting the effectiveness of monetary and fiscal policy in the US, measured on the basis of structural VARs},
  journal = {Economic Bulletin and Financial Stability Report Articles},
  school = {Banco De Portugal},
  year = {2012},
  url = {http://www.bportugal.pt/en-US/BdP%20Publications%20Research/AB201204_e.pdf}
}
Pereira, M.C. and Wemans, L. Output effects of a measure of tax shocks based on changes in legislation for Portugal 2013 (w201315)School: Banco de Portugal, Economics and Research Department  techreport URL 
Abstract: This paper develops a new measure of quarterly discretionary tax shocks for Portugal that result from changes in legislation, following the narrative approach. It covers the years from 1996 to 2012 and was based on a comprehensive analysis of tax policy measures taken in the course of this period. The findings point to strongly negative and persistent effects of legislated tax increases on GDP and private consumption, matching the tendency of the narrative approach to yield comparatively high tax multipliers.
BibTeX:
@techreport{Pereira2013,
  author = {Manuel Coutinho Pereira and Lara Wemans},
  title = {Output effects of a measure of tax shocks based on changes in legislation for Portugal},
  school = {Banco de Portugal, Economics and Research Department},
  year = {2013},
  number = {w201315},
  url = {http://www.bportugal.pt/en-US/BdP%20Publications%20Research/wp201315.pdf}
}
Pereira, M.C. and Wemans, L. Output effects of fiscal policy in Portugal: a structural VAR approach 2013 Economic Bulletin and Financial Stability Report ArticlesSchool: Banca De Portugal  techreport URL 
Abstract: This study applies the structural VAR methodology to the identifi cation of fi scal policy shocks in Portugal, using quarterly general government accounts from 1995 to 2011. Using a more detailed breakdown of variables than is usual, an estimate is made of the impact on economic activity of shocks to taxes, broken down into direct and indirect taxes, transfers, and government consumption, broken down into compensation of employees and expenditure on goods and services. The fi ndings point to the existence of multiplier effects on output with a conventional sign (except for expenditure on goods and services) in the sample period, stronger for compensation of employees and direct taxes than for the remaining variables analysed. At the same time, changes in indirect taxes and, to a lesser degree, in transfers, tend to cause less of an impact on economic activity.
BibTeX:
@techreport{Pereira2013a,
  author = {Manuel Coutinho Pereira and Lara Wemans},
  title = {Output effects of fiscal policy in Portugal: a structural VAR approach},
  journal = {Economic Bulletin and Financial Stability Report Articles},
  school = {Banca De Portugal},
  year = {2013},
  url = {http://www.bportugal.pt/en-US/BdP%20Publications%20Research/AB201300_e.pdf}
}
Pereira, M.C. and Wemans, L. The macroeconomic effects of legislated tax changes in Portugal 2013 Economic Bulletin and Financial Stability Report ArticlesSchool: Banca De Portugal  techreport URL 
Abstract: No abstract is available for this item.
BibTeX:
@techreport{Pereira2013b,
  author = {Manuel Coutinho Pereira and Lara Wemans},
  title = {The macroeconomic effects of legislated tax changes in Portugal},
  journal = {Economic Bulletin and Financial Stability Report Articles},
  school = {Banca De Portugal},
  year = {2013},
  url = {http://www.bportugal.pt/en-US/BdP%20Publications%20Research/AB201312_e.pdf}
}
Perotti, R. Expectations and Fiscal Policy: An Empirical Investigation 2011 (429)School: IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University  techreport URL 
Abstract: With fiscal foresight, the shocks identified by standard Vector Autoregression (SVAR) techniques can be non-fundamental for the variables of interest. In an important paper, Ramey (2011) uses direct measures of the private sector's forecast revisions of defense or federal spending to estimate the effects of government spending shocks in a VAR, obtaining the "expectations - augmented" VAR, or EVAR. The response of GDP to these shocks is smaller than 1, and consumption and the real wage fall: this is consistent with the neoclassical model, but the opposite of recent results from SVARs. In this paper, I make three points. First, EVARs and SVARs give virtually the same results. Ramey reaches the opposite conclusion because she never estimates the two specifications on the same sample and with the same government spending variable. Second, the evidence from EVARs is not robust. It is enough to dummy out just two quarters during WWII (when rationing was introduced) or during the Korean War (when new Fed regulation discouraging the purchase of durables was introduced) for the negative effects of defense spending shocks to disappear. Third, the forecast revision of federal spending from the Survey of Professional Forecasters has high explanatory power for government spending, but for the "wrong" reason: the predictive power of expected government spending growth is extremely low, so that the forecast error is effectively actual spending growth less noise.
BibTeX:
@techreport{Perotti2011,
  author = {Roberto Perotti},
  title = {Expectations and Fiscal Policy: An Empirical Investigation},
  school = {IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University},
  year = {2011},
  number = {429},
  url = {ftp://ftp.igier.unibocconi.it/wp/2011/429.pdf}
}
Perotti, R. Defense Government Spending Is Contractionary, Civilian Government Spending Is Expansionary 2014 (20179)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: Impulse responses to government spending shocks in Standard Vector Autoregressions (SVARs) typically display "expansionary" features. However, SVARs can be subject to a "non-fundamentalness" problem. "Expectations - Augmented" VARs (EVARs), which use direct measures of forecasts of defense spending, typically display "contractionary" responses to a defense news shock. I show that, when properly specified, SVARs and EVARs give virtually identical results. The reason for the widespread, opposite view is that defense shocks have "contractionary" effects while civilian government spending shocks have "expansionary" effects. Existing EVARs and SVARs, however, include only total government spending. In addition, the former are typically estimated on samples that include WWII and the Korean war, when defense shocks prevailed, while the latter are estimated mostly on post-1953 samples, when civilian shocks prevailed.
BibTeX:
@techreport{Perotti2014,
  author = {Roberto Perotti},
  title = {Defense Government Spending Is Contractionary, Civilian Government Spending Is Expansionary},
  school = {National Bureau of Economic Research, Inc},
  year = {2014},
  number = {20179},
  url = {http://www.nber.org/papers/w20179.pdf}
}
Pescatori, A., Leigh, D., Guajardo, J. and Devries, P. A New Action-Based Dataset of Fiscal Consolidation 2011 (11/128)School: International Monetary Fund  techreport URL 
Abstract: This paper presents a new dataset of fiscal consolidation for 17 OECD economies during 1978-2009. We focus on discretionary changes in taxes and government spending primarily motivated by a desire to reduce the budget deficit and not by a response to prospective economic conditions. To identify the motivation and budgetary impact of the fiscal policy changes, we examine contemporaneous policy documents, including Budgets, Budget Speeches, central bank reports, Convergence and Stability Programs submitted by the authorities to the European Commission, and IMF and OECD reports. The resulting series can be used to estimate the macroeconomic effects of fiscal consolidation.
BibTeX:
@techreport{Pescatori2011,
  author = {Andrea Pescatori and Daniel Leigh and Jaime Guajardo and Pete Devries},
  title = {A New Action-Based Dataset of Fiscal Consolidation},
  school = {International Monetary Fund},
  year = {2011},
  number = {11/128},
  url = {http://www.imf.org/external/pubs/ft/wp/2011/wp11128.pdf}
}
Pier Carlo Padoan, U.S. and van den Noord, P. Avoiding debt traps 2013
Vol. 2012School: OECD 
techreport URL 
Abstract: In this article we develop a simple and stylised analytical framework, which is both tractable and feasible to estimate, capturing several key dimensions of the sovereign debt crisis in Europe. We use it to examine if and how a combination of fiscal consolidation, structural reform and financial backstops can help countries, notably the southern euro-area countries, to escape from the debt trap. Our analysis confirms that the loss of fiscal policy space in countries trapped in bad dynamics inevitably requires that fiscal action be directed towards consolidation despite some output loss in the short run. In particular, reducing debt levels breeds stronger growth and results in lower sovereign risk premia. We identify also a very important role for structural reform to help countries escape from bad dynamics. Last but not least, we find that financial backstops are helpful, but only to "buy time". This additional time must be used productively, for fiscal consolidation and structural reforms to bear fruit as well as to make progress with institutional reforms of the European monetary union.
BibTeX:
@techreport{PierCarloPadoan2013,
  author = {Pier Carlo Padoan, Urban Sila and Paul van den Noord},
  title = {Avoiding debt traps},
  school = {OECD},
  year = {2013},
  volume = {2012},
  url = {https://www.oecd.org/eco/growth/avoiding-debt-traps-fiscal-consolidation-financial-backstops-and-structural-reforms.pdf}
}
Price, R.W.R., Dang, T.-T. and Guillemette, Y. New Tax and Expenditure Elasticity Estimates for EU Budget Surveillance 2014 (1174)School: OECD Publishing  techreport URL 
Abstract: This paper estimates the elasticities of government revenue and expenditure items with respect to the output gap for European Union (EU) countries. These elasticities are used by the European Commission, as part of the EU fiscal surveillance process, to calculate the semi-elasticity of the budget balance as a percentage of GDP with respect to the output gap. The study updates the earlier 2005 study of OECD economies using the most recent datasets and tax codes, the coverage being confined in this paper to the 28 EU member states, seven of which are not OECD members. The same basic two-step methodology is retained: revenue and expenditure elasticities with respect to the output gap being defined as the product of, first, the elasticities of individual revenue and expenditure items with respect to their bases and, second, the elasticities of these bases with respect to the output gap. A number of refinements and methodological improvements are made relative to the 2005 study. The revisions to individual elasticities relative to the 2005 vintage are significant in a number of cases but do not follow a clear pattern across countries, except for the elasticities of corporate income tax revenue which are revised up in most cases.
BibTeX:
@techreport{Price2014,
  author = {Robert W. R. Price and Thai-Thanh Dang and Yvan Guillemette},
  title = {New Tax and Expenditure Elasticity Estimates for EU Budget Surveillance},
  school = {OECD Publishing},
  year = {2014},
  number = {1174},
  url = {http://www.oecd-ilibrary.org/economics/new-tax-and-expenditure-elasticity-estimates-for-eu-budget-surveillance_5jxrh8f24hf2-en}
}
Price, R.W.R., Dang, T.-T. and Botev, J. Adjusting fiscal balances for the business cycle: New tax and expenditure elasticity estimates for OECD countries 2015 (1275)School: OECD Publishing  techreport URL 
Abstract: This paper re-estimates the elasticities of government revenue and expenditure items with respect to the output gap for OECD countries. These elasticities are used by the OECD to calculate cyclically adjusted fiscal balances. The study updates the earlier 2005 study using the most recent datasets and tax codes, the coverage being confined in this paper to 35 countries, the 34 OECD member states and Latvia. The same two-step methodology is retained: revenue and expenditure elasticities with respect to the output gap being defined as the product of, first, the elasticities of individual revenue and expenditure items with respect to their bases and, second, the elasticities of these bases with respect to the output gap. A number of refinements and methodological improvements are made relative to the 2005 study. The revisions to individual elasticities relative to the 2005 vintage are significant in a number of cases but do not follow a clear pattern across countries, except for the elasticities of corporate income tax revenue which are revised up in most cases.
BibTeX:
@techreport{Price2015,
  author = {Robert W. R. Price and Thai-Thanh Dang and Jarmila Botev},
  title = {Adjusting fiscal balances for the business cycle: New tax and expenditure elasticity estimates for OECD countries},
  school = {OECD Publishing},
  year = {2015},
  number = {1275},
  url = {http://www.oecd-ilibrary.org/economics/adjusting-fiscal-balances-for-the-business-cycle_5jrp1g3282d7-en}
}
Pusch, T. and Rannberg, A. Fiscal Spending Multiplier Calculations based on Input-Output Tables with an Application to EU Members 2011 (1)School: Halle Institute for Economic Research  techreport URL 
Abstract: Fiscal spending multiplier calculations have been revived in the aftermath of the global financial crisis. Much of the current literature is based on VAR estimation methods and DSGE models. The aim of this paper is not a further deepening of this literature but rather to implement a calculation method of multipliers which is suitable for open economies like EU member states. To this end, Input-Output tables are used as by this means the import intake of domestic demand components can be isolated in order to get an appropriate base for the calculation of the relevant import quotas. The difference of this method is substantial - on average the calculated multipliers are 15% higher than the conventional GDP fiscal spending multiplier for EU members. Multipliers for specific spending categories are comparably high, ranging between 1.4 and 1.8 for many members of the EU. GDP drops due to budget consolidation might therefore be substantial if monetary policy is not able to react in an expansionary manner.
BibTeX:
@techreport{Pusch2011,
  author = {Toralf Pusch and A. Rannberg},
  title = {Fiscal Spending Multiplier Calculations based on Input-Output Tables with an Application to EU Members},
  school = {Halle Institute for Economic Research},
  year = {2011},
  number = {1},
  url = {http://www.iwh-halle.de/d/publik/disc/1-11.pdf}
}
Ramey, V., Zubairy, S. and Owyang, M. Are Government Spending Multipliers State Dependent? Evidence from U.S. and Canadian Historical Data 2013 (290)School: Society for Economic Dynamics  techreport URL 
Abstract: A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and Canada. Using several methods for estimating multipliers, we find no evidence that multipliers are greater during periods of high unemployment in the U.S. In every case, they are below unity. We do find evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.
BibTeX:
@techreport{Ramey2013,
  author = {Valerie Ramey and Sarah Zubairy and Michael Owyang},
  title = {Are Government Spending Multipliers State Dependent? Evidence from U.S. and Canadian Historical Data},
  school = {Society for Economic Dynamics},
  year = {2013},
  number = {290},
  url = {https://economicdynamics.org/meetpapers/2013/paper_290.pdf}
}
Ramey, V.A. and Zubairy, S. Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data 2014 (20719)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper investigates whether U.S. government spending multipliers differ according to two potentially important features of the economy: (1) the amount of slack and (2) whether interest rates are near the zero lower bound. We shed light on these questions by analyzing new quarterly historical U.S. data covering multiple large wars and deep recessions. We estimate a state-dependent model in which impulse responses and multipliers depend on the average dynamics of the economy in each state. We find no evidence that multipliers differ by the amount of slack in the economy. These results are robust to many alternative specifications. The results are less clear for the zero lower bound. For the entire sample, there is no evidence of elevated multipliers near the zero lower bound. When World War II is excluded, some point estimates suggest higher multipliers during the zero lower bound state, but they are not statistically different from the normal state. Our results imply that, contrary to recent conjecture, government spending multipliers were not necessarily higher than average during the Great Recession.
BibTeX:
@techreport{Ramey2014,
  author = {Valerie A. Ramey and Sarah Zubairy},
  title = {Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data},
  school = {National Bureau of Economic Research, Inc},
  year = {2014},
  number = {20719},
  url = {http://www.nber.org/papers/w20719.pdf}
}
Ramey, V.A. Macroeconomic Shocks and Their Propagation 2016 (21978)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This chapter reviews and synthesizes our current understanding of the shocks that drive economic fluctuations. The chapter begins with an illustration of the problem of identifying macroeconomic shocks, followed by an overview of the many recent innovations for identifying shocks. It then reviews in detail three main types of shocks: monetary, fiscal, and technology shocks. After surveying the literature, each section presents new estimates that compare and synthesize key parts of the literature. The penultimate section briefly summarizes a few additional shocks. The final section analyzes the extent to which the leading shock candidates can explain fluctuations in output and hours. It concludes that we are much closer to understanding the shocks that drive economic fluctuations than we were twenty years ago.
BibTeX:
@techreport{Ramey2016,
  author = {Valerie A. Ramey},
  title = {Macroeconomic Shocks and Their Propagation},
  school = {National Bureau of Economic Research, Inc},
  year = {2016},
  number = {21978},
  url = {http://www.nber.org/papers/w21978.pdf}
}
Rannenberg, A., Schoder, C. and Strasky, J. The macroeconomic effects of the Euro Area's fiscal consolidation 2011-2013: A Simulation-based approach 2015 (03/RT/15)School: Central Bank of Ireland  techreport URL 
Abstract: We simulate the Euro Area's fiscal consolidation between 2011 and 2013 by employing two DSGE models used by the ECB and the European Commission, respectively. The cumulative multiplier amounts to 0.7 and 1.0 in the baseline, but increases to 1.3 with a reasonably calibrated financial accelerator and a crisis-related increase of the share of liquidity constrained households. In the latter scenario, fiscal consolidation would be largely responsible for the decline in the output gap from 2011-2013. Postponing the fiscal consolidation to a period of unconstrained monetary policy (until after the economic recovery) would have avoided most of these losses.
BibTeX:
@techreport{Rannenberg2015,
  author = {Rannenberg, Ansgar and Schoder, Christian and Strasky, Jan},
  title = {The macroeconomic effects of the Euro Area's fiscal consolidation 2011-2013: A Simulation-based approach},
  school = {Central Bank of Ireland},
  year = {2015},
  number = {03/RT/15},
  url = {http://www.boeckler.de/pdf/p_imk_wp_156_2015.pdf}
}
Ravn, M.O., Schmitt-Grohé, S. and Uribe, M. Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate 2007 (13328)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: Using panel structural VAR analysis and quarterly data from four industrialized countries, we document that an increase in government purchases leads to an expansion in output and private consumption, a deterioration in the trade balance, and a depreciation of the real exchange rate (i.e., a decrease in the domestic CPI relative to the exchange-rate adjusted foreign CPI). We propose an explanation for these observed effects based on the deep habit mechanism. We estimate the key parameters of the deep-habit model employing a limited information approach. The predictions of the estimated deep-habit model fit well the observed responses of output, consumption, the trade balance, and the real exchange rate to an unanticipated government spending shock. In addition, the deep-habit model predicts that in response to an anticipated increase in government spending consumption and wages fail to increase on impact, which is consistent with the empirical evidence stemming from the narrative identification approach. In this way, the deep-habit model reconciles the findings of the SVAR and narrative literatures on the effects of government spending shocks.
BibTeX:
@techreport{Ravn2007,
  author = {Morten O. Ravn and Stephanie Schmitt-Grohé and Martín Uribe},
  title = {Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate},
  school = {National Bureau of Economic Research, Inc},
  year = {2007},
  number = {13328},
  url = {http://www.nber.org/papers/w13328.pdf}
}
Ravn, M.O. and Mertens, K. A New Approach to the Estimation of Tax Multipliers 2011 (852)School: Society for Economic Dynamics  techreport URL 
Abstract: There has been much recent interest in estimation of fiscal policy shocks and their effects upon the macroeconomy. Nonetheless, there is still a considerable amount of disagreement about the size of multipliers and even about sign of the impact of fiscal shocks on key macroeconomic aggregates. Given the potential importance of fiscal policy as a stabilization tool, this state of the art is clearly unsatisfactory. This paper makes a contribution to the literature on tax multipliers. We develop a new method for estimating the impact of tax changes and shows that it delivers results that are useful for understanding conflicting results in the literature. The estimator can be adopted for the estimation of the impact of other fiscal shocks (e.g. government spending shocks) as well as to monetary policy shocks. The key idea of the paper is to use information from narrative accounts in a structural VAR estimations of the impact of tax shocks. In particular, we derive an SVAR estimate of the impact of tax changes that is based upon the assumption that narratively identified tax shocks can be viewed as a noisy signal on the 'true' unobserved tax shocks. We implement this strategy by adopting the 'exogenous' components of Romer and Romer (2010) narrative tax policy account as a noisy measure of the true tax policy shocks in a VAR set-up. We find estimates of tax multipliers that are much larger than the estimates of Blanchard and Perotti but slightly smaller (on impact) than those reported by Mertens and Ravn (2010). According to our estimates a 1 percent drop in tax liabilities increases aggregate output by 2 percent on impact and with 3 percent with two years delay. We also decompose the aggregate tax changes into personal income tax changes and corporate tax changes. We find that corporate income tax changes have much larger impact on aggregate activity than personal income tax changes. We show that the differences in the estimates of the impact of tax changes relative to Blanchard and Perotti (2002) derive from differences in the estimate of the response of tax revenues to aggregate output (in particular). Blanchard and Perotti's (2002) estimates rely on a calibration of the contemporaneous elasticity of tax revenues to GDP of 2. Their identification procedure does not allow for a separate estimate of this parameter since the calibration is introduced in order to provide identification of the tax shock. Our procedure instead allows us to estimate this parameter and we find a point estimate of the output elasticity of tax revenues of 3. A standard simultaneity bias argument therefore explains our higher estimates of the impact of tax shocks on output relative to Blanchard and Perotti's (2002) estimates. We also argue that the higher estimate of the elasticity of tax revenues to output produced by our estimator is natural given that the calibration of this parameter adopted in the SVAR literature relies on reduced form estimates that suffer from the same type of simultaneity bias that the identification strategy itself is meant to address. We produce some indirect evidence that is supportive of the higher estimate of the elasticity of tax revenues to output produced by our estimator relative to Blanchard and Perotti (2002). In particular, we estimate the parameters for a sample that excludes the Great Depression and then out-of-sample tax revenue forecasts using the realized path of output (and other variables) using either the Blanchard and Perotti (2002) calibration of the output elasticity of tax revenues or the estimate of this parameter produced by our estimator. We find the latter to produce much better out-of-sample estimates of the tax revenue path during the Great Depression. Our estimator also produces an estimate of the reliability of the narrative account of the exogenous tax shocks. Assume that the true tax shock is a convex combination of the narrative measure and a white noise measurement error. We estimate that the weight of the Romer and Romer (2010) tax shock is around 85 percent. This indicates that the narrative account is very informative but associated with some measurement error. It is the presence of this measurement error that explains the difference between the results in this paper and those in our earlier work, Mertens and Ravn (2010).
BibTeX:
@techreport{Ravn2011,
  author = {Morten O. Ravn and Karel Mertens},
  title = {A New Approach to the Estimation of Tax Multipliers},
  school = {Society for Economic Dynamics},
  year = {2011},
  number = {852},
  url = {https://economicdynamics.org/meetpapers/2011/paper_852.pdf}
}
Ray Barrell, D.H. and Hurst, I. Fiscal multipliers and prospects for consolidation 2013
Vol. 2012School: OECD 
techreport URL 
Abstract: This article looks at various aspects of fiscal consolidation in 18 OECD economies. The prospects for fiscal consolidation depend upon the problems a country may face with its debt stock, the political will to deal with these problems and on the costs of consolidation. These costs are a function of the impacts of fiscal policy on the economy, which is the focus of this study. The analysis is based on a series of simulations using the National Institute Global Econometric Model, NiGEM. Fiscal multipliers differ across countries because the structure and behaviour of economies differ. They also differ within countries, depending on factors such as the fiscal instrument implemented, the policy response to fiscal innovations, and expectation formation by economic agents. The purpose of this study is to allow an assessment of the likely impact on the economy and on the fiscal position of consolidation programmes.We decompose the key factors that determine the size of the multiplier by changing them one at a time. Even under a specified set of assumptions, the outturn for the budget balance retains a high degree of uncertainty. We illustrate this uncertainty by calibrating probability bounds around projected debt profiles. This can allow an assessment of the probability of achieving specified fiscal targets, such as those set out in the European Union's new Fiscal Compact.
BibTeX:
@techreport{RayBarrell2013,
  author = {Ray Barrell, Dawn Holland and Ian Hurst},
  title = {Fiscal multipliers and prospects for consolidation},
  school = {OECD},
  year = {2013},
  volume = {2012},
  url = {http://www.oecd-ilibrary.org/economics/fiscal-multipliers-and-prospects-for-consolidation_eco_studies-2012-5k8x6k5wc58x}
}
Fragetta, M. and Melina, G. The Effects of Fiscal Shocks in SVAR Models: A Graphical Modelling Approach 2010 (1006)School: Birkbeck, Department of Economics, Mathematics & Statistics  techreport URL 
Abstract: We apply graphical modelling theory to identify fiscal policy shocks in SVAR models of the US economy. Unlike other econometric approaches of which achieve identification by relying on potentially contentious a priori assumptions of graphical modelling is a data based tool. Our results are in line with Keynesian theoretical models, being also quantitatively similar to those obtained in the recent SVAR literature à la Blanchard and Perotti (2002), and contrast with neoclassical real business cycle predictions. Stability checks confirm that our findings are not driven by sample selection.
BibTeX:
@techreport{RePEc:bbk:bbkefp:1006,
  author = {Matteo Fragetta and Giovanni Melina},
  title = {The Effects of Fiscal Shocks in SVAR Models: A Graphical Modelling Approach},
  school = {Birkbeck, Department of Economics, Mathematics & Statistics},
  year = {2010},
  number = {1006},
  url = {http://www.bbk.ac.uk/ems/research/wp/2010/PDFs/BWPEF1006.pdf}
}
Pappa, E. The effects of fiscal expansions: an international comparison 2009 (409)School: Barcelona Graduate School of Economics  techreport URL 
Abstract: We compare the transmission of fiscal shocks in four OECD countries and in the Euro area. Fiscal shocks are identified in a SVAR by the restrictions that disturbances to government consumption, government investment and government employment increase output and deficits contemporaneously. These restrictions hold in both prototype RBC and New-Keynesian models. All spending shocks increase private consumption and employment, while the responses of private investment and the real wage are mixed. The output effects of government consumption and investment shocks are smaller than those of government employment shocks for all countries and all samples. The transmission of fiscal shocks has changed features over time.
BibTeX:
@techreport{RePEc:bge:wpaper:409,
  author = {Evi Pappa},
  title = {The effects of fiscal expansions: an international comparison},
  school = {Barcelona Graduate School of Economics},
  year = {2009},
  number = {409},
  url = {http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/409.pdf}
}
Bahaj, S. and Foulis, A. Macroprudential policy under uncertainty 2016 (584)School: Bank of England  techreport URL 
Abstract: We argue that the uncertainty over the impact of macroprudential policy need not make a policymaker more cautious. Our starting point is the classic result of Brainard (1967) which finds that uncertainty over the impact of a policy instrument will make a policymaker less active. This result is challenged in a series of richer models designed to take into account the more complex reality faced by a macroprudential policymaker. We find that the presence of unquantifiable sources of risk, potential asymmetries in policy objectives, the ability to learn from policy actions, and private sector uncertainty over policy objectives can all lead to more active policy in the face of uncertainty.
BibTeX:
@techreport{RePEc:boe:boeewp:0584,
  author = {Bahaj, Saleem and Foulis, Angus},
  title = {Macroprudential policy under uncertainty},
  school = {Bank of England},
  year = {2016},
  number = {584},
  url = {http://www.bankofengland.co.uk/research/Documents/workingpapers/2016/swp584.pdf}
}
Born, B. and Müller, G.J. Government Spending Shocks in Quarterly and Annual U.S. Time-Series 2009 (bgse16_2009)School: University of Bonn, Germany  techreport URL 
Abstract: Government spending shocks are frequently identi?ed in quarterly time-series data by ruling out a contemporaneous response of government spending to other macroeconomic aggregates. We provide evidence that this assumption may not be too restrictive for U.S. annual time-series data.
BibTeX:
@techreport{RePEc:bon:bonedp:bgse16_2009,
  author = {Benjamin Born and Gernot J. Müller},
  title = {Government Spending Shocks in Quarterly and Annual U.S. Time-Series},
  school = {University of Bonn, Germany},
  year = {2009},
  number = {bgse16_2009},
  url = {http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse16_2009.pdf}
}
Pesaran, M.H. and Smith, R.P. Tests of Policy Ineffectiveness in Macroeconometrics 2014 (4871)School: CESifo Group Munich  techreport URL 
Abstract: This paper proposes tests of policy ineffectiveness in the context of macroeconometric rational expectations models. It is assumed that there is a policy intervention that takes the form of changes in the parameters of a policy rule, and that there are sufficient observations before and after the intervention. The test is based on the difference between the realisations of the outcome variable of interest and counterfactuals based on no policy intervention, using only the pre-intervention parameter estimates, and in consequence the Lucas Critique does not apply. The paper develops tests of policy ineffectiveness for a full structural model, with and without exogenous, policy or non-policy, variables. Asymptotic distributions of the proposed tests are derived both when the post intervention sample is fixed as the pre-intervention sample expands, and when both samples rise jointly but at different rates. The performance of the test is illustrated by a simulated policy analysis of a three equation New Keynesian Model, which shows that the test size is correct but the power may be low unless the model includes exogenous variables, or if the policy intervention changes the steady states, such as the inflation target.
BibTeX:
@techreport{RePEc:ces:ceswps:_4871,
  author = {M. Hashem Pesaran and Ron P. Smith},
  title = {Tests of Policy Ineffectiveness in Macroeconometrics},
  school = {CESifo Group Munich},
  year = {2014},
  number = {4871},
  url = {http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2014/wp-cesifo-2014-07/cesifo1_wp4871.pdf}
}
Favero, C.A. and Karamysheva, M. What Do We Know About Fiscal Multipliers? 2015 (10986)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: The Empirical evidence on fiscal multipliers is very heterogenous. In this paper we first survey available estimates of fiscal multipliers to try to understand their heterogeneity. We provide a general framework that allows to make the identification and specification choices made by the different authors explict and leads hopefully to a better understanding of the heterogeneity of results.
BibTeX:
@techreport{RePEc:cpr:ceprdp:10986,
  author = {Favero, Carlo A. and Karamysheva, Madina},
  title = {What Do We Know About Fiscal Multipliers?},
  school = {C.E.P.R. Discussion Papers},
  year = {2015},
  number = {10986},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=10986}
}
Fatás, A. and Mihov, I. The Effects of Fiscal Policy on Consumption and Employment: Theory and Evidence 2001 (2760)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: This Paper compares the dynamic impact of fiscal policy on macroeconomic variables implied by a large class of general equilibrium models with the empirical results from an identified vector autoregression. In the data we find that positive innovations in government spending are followed by strong and persistent increases in consumption and employment. The effects are particularly pronounced when government wage expenditures increase. We compare these findings to several variations of a standard real business cycle model and we find that the positive correlation in the responses of employment and consumption cannot be matched by the model under plausible assumptions for the values of the calibration parameters.
BibTeX:
@techreport{RePEc:cpr:ceprdp:2760,
  author = {Fatás, Antonio and Mihov, Ilian},
  title = {The Effects of Fiscal Policy on Consumption and Employment: Theory and Evidence},
  school = {C.E.P.R. Discussion Papers},
  year = {2001},
  number = {2760},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=2760#}
}
Brückner, M. and Pappa, E. Fiscal expansions affect unemployment, but they may increase it 2010 (7766)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: Evidence from structural VARs suggests that the unemployment rate significantly increases following increases in government expenditures in many OECD countries. Results hold for a variety of specifications and identification schemes. Fiscal expansions also tend to increase the participation rate, vacancies, real wages and employment while they do not affect significantly labor market tightness. Existing models have difficulties in generating such responses. We introduce insider and outsider workers and a labor force participation choice into a New Keynesian model with matching frictions and show that calibrated versions of the model can generate the empirical regularities.
BibTeX:
@techreport{RePEc:cpr:ceprdp:7766,
  author = {Brückner, Markus and Pappa, Evi},
  title = {Fiscal expansions affect unemployment, but they may increase it},
  school = {C.E.P.R. Discussion Papers},
  year = {2010},
  number = {7766},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=7766}
}
Cléaud, G., Lemoine, M. and Pionnier, P.-A. Which size and evolution of the government expenditure multiplier in France (1980-2010)? 2013 (g2013-15)School: Institut National de la Statistique et des Etudes Economiques, DESE  techreport URL 
Abstract: The importance of the stimulus packages that were injected in most advanced economies from the start of the financial crisis and the speed at which budgets are now being consolidated in Europe has revived the long-lasting debate on the size of fiscal multipliers. In this study, we focus on government expenditures on goods and services. Our conclusion following Blanchard and Perotti (2002) for the identification of government spending shocks is that the multiplier is significant and not far from 1 on impact and becomes statistically insignificant after about 3 years in France. We provide numerous robustness checks concerning the definition of expenditures, assumptions about data stationarity, the role of expectations and the choice of the sample. Moreover, using a time-varying SVAR model, our main findings are (1) that the multiplier did not evolve significantly at any horizon since the beginning of the 1980s and (2) that the variance of shocks hitting the economy evolves a lot more than the model autoregressive parameters. Even in alternative specifications where the Bayesian priors are pushed towards time-variation, the main evolution that we uncover is a (non-significant) decrease of the medium term expenditure multiplier, partly linked to a more aggressive monetary policy since the 1990s. We do not find evidence of an increase of the multiplier during every recession in France, contrary to the finding of Auerbach and Gorodnichenko (2012) for the United States. At least, business cycle conditions do not seem to be the main driver of the evolution of the expenditure multiplier in the last 30 years in France.
BibTeX:
@techreport{RePEc:crs:wpdeee:g2013-15,
  author = {G. Cléaud and M. Lemoine and P.-A. Pionnier},
  title = {Which size and evolution of the government expenditure multiplier in France (1980-2010)?},
  school = {Institut National de la Statistique et des Etudes Economiques, DESE},
  year = {2013},
  number = {g2013-15},
  url = {http://www.insee.fr/en/publications-et-services/docs_doc_travail/G2013-15bis.pdf}
}
Straub, R. and Tchakarov, I. Assessing the impact of a change in the composition of public spending: a DSGE approach 2007 (0795)School: European Central Bank  techreport URL 
Abstract: Despite intense calls for safeguarding public investment in Europe, public investment expenditure, when measured in relation to GDP, has steadily fallen in the last three decades, evoking fears that economic activity may be correspondingly negatively affected. At the same time, however, public consumption in the EU-12 countries has trended up. In this paper, we provide a macroeconomic assessment of the observed change in the composition of public spending in the euro area in a medium-scale two-country dynamic stochastic general equilibrium (DSGE) model. First, we analyze the channels through which, both temporary and permanent public investment shocks generate larger fiscal multipliers than exogenous increases in public consumption. Furthermore, we quantify the negative impact of a change in fiscal stance, characterized by a permanent rise in public consumption and a permanent fall in public investment, keeping thereby the overall level of public spending constant. The key message of the paper is that calls for reversing the observed trend in the composition of public spending are well justifed. JEL Classification: F41, F42
BibTeX:
@techreport{RePEc:ecb:ecbwps:20070795,
  author = {Straub, Roland and Tchakarov, Ivan},
  title = {Assessing the impact of a change in the composition of public spending: a DSGE approach},
  school = {European Central Bank},
  year = {2007},
  number = {0795},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp795.pdf}
}
Attinasi, M.G. and Metelli, L. Is fiscal consolidation self-defeating? A Panel-VAR analysis for the Euro area countries 2016 (1883)School: European Central Bank  techreport URL 
Abstract: This paper studies the effects of fiscal consolidation on the debt-to-GDP ratio of 11 Euro area countries. Using a quarterly fiscal Panel VAR allows us to trace out the dynamics of the debt-to-GDP ratio following a fiscal shock and to disentangle the main channels through which fiscal consolidation affects the debt ratio. We define a fiscal consolidation episode as self-defeating if the debt-to-GDP ratio does not decrease compared to the pre-shock level. Our main finding is that when consolidation is implemented via a cut in government primary spending, the debt ratio, after an initial increase, falls to below its pre-shock level. When instead the consolidation is implemented via an increase in government revenues, the initial increase in the debt ratio is stronger and, eventually, the debt ratio reverts to its pre-shock level, resulting in what we call self-defeating austerity. JEL Classification: E62, H6, C33
BibTeX:
@techreport{RePEc:ecb:ecbwps:20161883,
  author = {Attinasi, Maria Grazia and Metelli, Luca},
  title = {Is fiscal consolidation self-defeating? A Panel-VAR analysis for the Euro area countries},
  school = {European Central Bank},
  year = {2016},
  number = {1883},
  url = {http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1883.en.pdf}
}
Bahaj, S.A. Systemic sovereign risk: macroeconomic implications in the euro area 2014 (58110)School: London School of Economics and Political Science, LSE Library  techreport URL 
Abstract: What are the macroeconomic implications of changes in sovereign risk premia? In this paper, I use a novel identification strategy coupled with a new dataset for the Euro Area to answer this question. I show that exogenous innovations in sovereign risk premia were an important driver of the economic dynamics of crisis-hit countries, explaining 30-50 % of the forecast error of unemployment. I also shed light on the mechanisms through which this occurs. Fluctuations in sovereign risk premia explain 20-40 % of the variance of private borrowing costs. Increases in sovereign risk result in substantial capital flight, external adjustment and import compression. In contrast, governments appear not to increase their primary balances in response to increases in sovereign risk. Identifying these causal effects involves isolating a source of fluctuations in sovereign borrowing costs exogenous to the economy in question. I address this problem by relying upon the transmission of country-specific events during the crisis in Europe to the sovereign risk premia in the remainder of the union. I construct a new dataset of critical events in foreign crisis-hit countries and I measure the impact of these events on yields in the economy of interest at an intraday frequency. An aggregation of foreign events serve as a proxy variable for structural innovations to the yield to identify shocks in a proxy SVAR. I extend this methodology into a Bayesian setting to allow for flexible panel assumptions. A counterfactual analysis is used to remove the impact of foreign events from the bond yields of crisis hit countries: I find that 40-60 % of the trough-to-peak moves in bond yields in crisis-hit countries are explained by foreign events, thereby suggesting that the crisis was not purely a function of weak local economic conditions.
BibTeX:
@techreport{RePEc:ehl:lserod:58110,
  author = {Saleem A. Bahaj},
  title = {Systemic sovereign risk: macroeconomic implications in the euro area},
  school = {London School of Economics and Political Science, LSE Library},
  year = {2014},
  number = {58110},
  url = {http://eprints.lse.ac.uk/58110/1/__lse.ac.uk_storage_LIBRARY_Secondary_libfile_shared_repository_Content_Centre%20For%20Macroeconomics%20discussion%20papers_Systemic%20sovereign%20risk_Bahaj_Systemic%20sovereign%20risk_2014.pdf}
}
Dell'Erba, S. and Sola, S. Fiscal Policy, Interest Rates and Risk Premia in Open Economy 2013 (05-2013)School: Economics Section, The Graduate Institute of International Studies  techreport URL 
Abstract: This paper reconsiders the effects of fiscal policy on long-term interest rates and sovereign spreads employing a Factor Augmented Panel (FAP) to control for the presence of common unobservable factors. We construct a real-time dataset of macroeconomic and fiscal variables for a panel of OECD countries for the period 1989-2009. We find that two global factors - the global monetary and fiscal policy stances - explain more than 60 % of the variance in the long-term interest rates. The same two global factors play a relevant role also in explaining the variance of sovereign spreads, which in addition respond to global risk aversion. With respect to standard estimation techniques the use of the FAP reduces the importance of domestic fiscal variables in explaining long- term interest rates, while it emphasizes their importance in explaining sovereign spreads. Using the FAP framework we also analyse the cross-country differences in the propagation of a shock to global fiscal stance and global risk aversion. We find the effects of the former to be modest in large economies and strong in economies characterized by low financial integration and current account deficits. Changes in global risk aversion, instead, lead to higher spreads in countries with a high stock of public debt and weaker political institutions.
BibTeX:
@techreport{RePEc:gii:giihei:heidwp05-2013,
  author = {Salvatore Dell'Erba and Sergio Sola},
  title = {Fiscal Policy, Interest Rates and Risk Premia in Open Economy},
  school = {Economics Section, The Graduate Institute of International Studies},
  year = {2013},
  number = {05-2013},
  url = {http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP05-2013.pdf}
}
Leeper, E.M., Leith, C. and Liu, D. Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy 2016 (2016_04)School: Business School - Economics, University of Glasgow  techreport URL 
Abstract: We develop a New Keynesian model with government bonds of mixed matu- rity and solve for optimal time-consistent policy using global solution techniques. This reveals several non-linearities absent from LQ analyses with one-period debt. Firstly, the steady-state balances an in ation and debt stabilization bias to gener- ate a small negative debt value with a slight undershooting of the in ation target. This falls far short of first-best ("war chest") asset levels. Secondly, starting from debt levels consistent with currently observed debt to GDP ratios the optimal pol- icy will gradually reduce that debt, but the policy mix changes radically along the transition path. At high debt levels there is a reliance on a relaxation of monetary policy to reduce debt through an expanded tax base and reduced debt service costs, while tax rates are used to moderate the increases in in ation. However, as debt levels fall, the use of monetary policy in this way diminishes and the authority turns to fiscal policy to continue debt reduction. This endogenous switch in the policy mix occurs at higher debt levels, the longer the average debt maturity. Allowing the policymaker to optimally vary debt maturity in response to shocks and across varying levels of debt, we nd that variations in maturity are largely used to sup- port changes in the underlying time-consistent policy mix rather than the speed of fiscal correction. Finally, introducing a mild degree of policy maker myopia can re- produce steady-state debt to GDP ratios and in ation rates not dissimilar to those observed empirically, without changing any of the qualitative results presented in the paper.
BibTeX:
@techreport{RePEc:gla:glaewp:2016_04,
  author = {Eric M Leeper and Campbell Leith and Ding Liu},
  title = {Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy},
  school = {Business School - Economics, University of Glasgow},
  year = {2016},
  number = {2016_04},
  url = {http://www.gla.ac.uk/media/media_440514_en.pdf}
}
Favero, C.A. and Giavazzi, F. Reconciling VAR-based and Narrative Measures of the Tax-Multiplier 2010 (361)School: IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University  techreport URL 
Abstract: The currently available empirical evidence shows remarkable differences between various estimates of the effects on U.S output of an exogenous shift in Federal tax liabilities. Shocks identified via the narrative method, imply a multiplier of about three over . an horizon of three years. Tax shocks identified in fiscal VAR models deliver a much smaller multipier of about one. Is this heterogeneity real, or is it simply the result of different approaches to the identification of exogenous shifts in taxes? Or of different specifications of the empirical model used to estimate the tax multiplier? In this paper we reconcile this apparently contradictory evidence by showing that the large multiplier obtained via the narrative identification methods are generated by the choice of a limited information approach in their estimation and not by the different nature of the shocks. Using the shocks identified by a Narrative methods in a multivariate dynamic model delivers estimates of the tax multiplier very much in line with those obtained in the traditional fiscal VAR approach.
BibTeX:
@techreport{RePEc:igi:igierp:361,
  author = {Carlo A. Favero and Francesco Giavazzi},
  title = {Reconciling VAR-based and Narrative Measures of the Tax-Multiplier},
  school = {IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University},
  year = {2010},
  number = {361},
  url = {ftp://ftp.igier.unibocconi.it/wp/2010/361.pdf}
}
Plekhanov, A., Kumar, M.S. and Leigh, D. Fiscal Adjustments; Determinants and Macroeconomic Consequences 2007 (07/178)School: International Monetary Fund  techreport URL 
Abstract: The paper analyzes the determinants of success of recent fiscal consolidations in the OECD countries as well as the short-run and long-run effects of fiscal adjustments on economic activity by looking at fourteen case studies, panel data for OECD countries, and the results of simulations using a non-Ricardian multi-country dynamic general equilibrium model. The study finds that while fiscal consolidations tend to have short-run contractionary effects, they can be expansionary in the long run, provided that they do not rely excessively on cuts in productive government expenditure. They can also create positive spillover effects for the rest of the world.
BibTeX:
@techreport{RePEc:imf:imfwpa:07/178,
  author = {Alexander Plekhanov and Manmohan S. Kumar and Daniel Leigh},
  title = {Fiscal Adjustments; Determinants and Macroeconomic Consequences},
  school = {International Monetary Fund},
  year = {2007},
  number = {07/178},
  url = {http://www.imf.org/external/pubs/ft/wp/2007/wp07178.pdf}
}
Leigh, D., Hauner, D. and Skaarup, M. Ensuring Fiscal Sustainability in G-7 Countries 2007 (07/187)School: International Monetary Fund  techreport URL 
Abstract: Rising longevity, falling fertility rates, and the retirement of the baby boom generation will substantially raise age-related government spending in most advanced and many emerging market countries. This paper assesses the evolution of fiscal sustainability for each of the G-7 countries using two standard primary gap indicators. The estimated fiscal adjustment required to ensure long-run fiscal sustainability is substantial for all G-7 countries. In particular, ensuring fiscal sustainability would require an average improvement in the primary balance of about 4 percentage points of GDP. While the overall adjustment required to achieve long-run fiscal sustainability in G-7 countries is large, there are significant growth benefits to putting public finances on a sustainable footing in the near term versus delayed adjustment.
BibTeX:
@techreport{RePEc:imf:imfwpa:07/187,
  author = {Daniel Leigh and David Hauner and Michael Skaarup},
  title = {Ensuring Fiscal Sustainability in G-7 Countries},
  school = {International Monetary Fund},
  year = {2007},
  number = {07/187},
  url = {http://www.imf.org/external/pubs/ft/wp/2007/wp07187.pdf}
}
Leigh, D. Achieving a Soft Landing; The Role of Fiscal Policy 2008 (08/69)School: International Monetary Fund  techreport URL 
Abstract: This paper utilizes an open-economy New Keynesian overlapping generations model to assess the extent to which fiscal policy, along side an inflation-forecast-based monetary policy, could enhance macroeconomic stability in Colombia. The model simulations indicate that, in addition to stabilizing output and inflation, a stronger response of the fiscal balance to excess tax revenue would reduce the burden on the central bank of adjusting interest rates, lessen the associated degree of exchange rate volatility, and contribute to a more stable external current account balance. The analysis also assesses how the success of fiscal policy in enhancing macroeconomic stability depends on the type of shock, the response of monetary policy, and the length of fiscal policy implementation lags.
BibTeX:
@techreport{RePEc:imf:imfwpa:08/69,
  author = {Daniel Leigh},
  title = {Achieving a Soft Landing; The Role of Fiscal Policy},
  school = {International Monetary Fund},
  year = {2008},
  number = {08/69},
  url = {http://www.imf.org/external/pubs/ft/wp/2008/wp0869.pdf}
}
Stehn, S.J. and Leigh, D. Fiscal and Monetary Policy During Downturns; Evidence From the G7 2009 (09/50)School: International Monetary Fund  techreport URL 
Abstract: This paper analyzes how fiscal and monetary policy typically respond during downturns in G7 countries. It evaluates whether discretionary fiscal responses to downturns are timely and temporary, and compares the response of fiscal policy to that of monetary policy. The results suggest that while responding more weakly and less quickly than monetary policy, discretionary fiscal policy is more timely than conventional wisdom would suggest, particularly in "Anglo-Saxon" countries, but the response differs substantially across fiscal instruments. Both fiscal and monetary policy are found to be subject to an easing bias, with more easing during downturns than tightening during upturns; and liable to easing in response to erroneously perceived downturns, many of which are subsequently revised to expansions.
BibTeX:
@techreport{RePEc:imf:imfwpa:09/50,
  author = {Sven Jari Stehn and Daniel Leigh},
  title = {Fiscal and Monetary Policy During Downturns; Evidence From the G7},
  school = {International Monetary Fund},
  year = {2009},
  number = {09/50},
  url = {http://www.imf.org/external/pubs/ft/wp/2009/wp0950.pdf}
}
Kumhof, M., Leigh, D. and Laxton, D. To Starve or Not to Starve the Beast? 2010 (10/199)School: International Monetary Fund  techreport URL 
Abstract: 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.
BibTeX:
@techreport{RePEc:imf:imfwpa:10/199,
  author = {Michael Kumhof and Daniel Leigh and Douglas Laxton},
  title = {To Starve or Not to Starve the Beast?},
  school = {International Monetary Fund},
  year = {2010},
  number = {10/199},
  url = {http://www.imf.org/external/pubs/ft/wp/2010/wp10199.pdf}
}
Callegari, G., Melina, G. and Batini, N. Successful Austerity in the United States, Europe and Japan 2012 (12/190)School: International Monetary Fund  techreport URL 
Abstract: The output effects of 2009 fiscal expansions have been hotly debated. But the discussion of fiscal multipliers is even more relevant now that several European countries have had to quickly retract their stimulus measures in an effort to regain market confidence. Using regime-switching VARs we estimate the impact of fiscal adjustment on the United States, Europe and Japan allowing for fiscal multipliers to vary across recessions and booms. We also estimate ex ante probabilities of recessions derived in association with different-sized and different types of consolidation shocks (expenditure- versus tax-based). We use these estimates to understand how consolidations should be designed to be most effective in terms of permanently and rapidly reducing a country's debt-to-GDP ratio. The main finding is that smooth and gradual consolidations are to be preferred to frontloaded or aggressive consolidations, especially for economies in recession facing high risk premia on public debt, because sheltering growth is key to the success of fiscal consolidation in these cases.
BibTeX:
@techreport{RePEc:imf:imfwpa:12/190,
  author = {Giovanni Callegari and Giovanni Melina and Nicoletta Batini},
  title = {Successful Austerity in the United States, Europe and Japan},
  school = {International Monetary Fund},
  year = {2012},
  number = {12/190},
  url = {http://www.imf.org/external/pubs/ft/wp/2012/wp12190.pdf}
}
Ball, L.M., Furceri, D., Leigh, D. and Loungani, P. The Distributional Effects of Fiscal Consolidation 2013 (13/151)School: International Monetary Fund  techreport URL 
Abstract: This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.
BibTeX:
@techreport{RePEc:imf:imfwpa:13/151,
  author = {Laurence M. Ball and Davide Furceri and Daniel Leigh and Prakash Loungani},
  title = {The Distributional Effects of Fiscal Consolidation},
  school = {International Monetary Fund},
  year = {2013},
  number = {13/151},
  url = {http://www.imf.org/external/pubs/ft/wp/2013/wp13151.pdf}
}
Dell'Erba, S. and Sola, S. Does Fiscal Policy Affect Interest Rates? Evidence from a Factor-Augmented Panel 2013 (13/159)School: International Monetary Fund  techreport URL 
Abstract: This paper reconsiders the effects of fiscal policy on long-term interest rates employing a Factor Augmented Panel (FAP) to control for the presence of common unobservable factors. We construct a real-time dataset of macroeconomic and fiscal variables for a panel of OECD countries for the period 1989-2012. We find that two global factors—the global monetary and fiscal policy stances—explain more than 60 percent of the variance in the long-term interest rates. Compared to the estimates from models which do not account for global factors, we find that the importance of domestic variables in explaining long-term interest rates is weakened. Moreover, the propagation of global fiscal shocks is larger in economies characterized by macroeconomic and institutional weaknesses.
BibTeX:
@techreport{RePEc:imf:imfwpa:13/159,
  author = {Salvatore Dell'Erba and Sergio Sola},
  title = {Does Fiscal Policy Affect Interest Rates? Evidence from a Factor-Augmented Panel},
  school = {International Monetary Fund},
  year = {2013},
  number = {13/159},
  url = {http://www.imf.org/external/pubs/ft/wp/2013/wp13159.pdf}
}
Dell'Erba, S., Poplawski-Ribeiro, M. and Koloskova, K. Medium-Term Fiscal Multipliers during Protracted Recessions 2014 (14/213)School: International Monetary Fund  techreport URL 
Abstract: The paper examines the consequences of fiscal consolidation in times of persistently low growth and high unemployment by estimating medium-term fiscal multipliers during protracted recessions (PR) in a sample of 17 OECD countries. Based on Jorda's (2005) local projection methodology, we find that cumulative fiscal multipliers related to output, employment and unemployment at five-year horizons are significantly above one during PR episodes. These results suggest that medium-term fiscal consolidation plans to reduce public debt burdens should proceed gradually if economic activity remains below trend for a prolonged period.
BibTeX:
@techreport{RePEc:imf:imfwpa:14/213,
  author = {Salvatore Dell'Erba and Marcos Poplawski-Ribeiro and Ksenia Koloskova},
  title = {Medium-Term Fiscal Multipliers during Protracted Recessions},
  school = {International Monetary Fund},
  year = {2014},
  number = {14/213},
  url = {http://www.imf.org/external/pubs/ft/wp/2014/wp14213.pdf}
}
Davig, T. and Leeper, E.M. Expectations And Fiscal Stimulus 2009 (2009-006)School: Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington  techreport URL 
Abstract: Increases in government spending trigger substitution effects—both inter- and intra-temporal—and a wealth effect. The ultimate impacts on the econ- omy hinge on current and expected monetary and fiscal policy behavior. Studies that impose active monetary policy and passive fiscal policy typically find that government consumption crowds out private consumption: higher future taxes create a strong negative wealth effect, while the active monetary response increases the real interest rate. This paper estimates Markov-switching policy rules for the United States and finds that monetary and fiscal policies fluctuate between ac- tive and passive behavior. When the estimated joint policy process is imposed on a conventional new Keynesian model, government spending generates positive consumption multipliers in some policy regimes and in simulated data in which all policy regimes are realized. The paper reports the model’s predictions of the macroeconomic impacts of the American Recovery and Reinvestment Act’s implied path for government spending under alternative monetary-fiscal policy combina- tions.
BibTeX:
@techreport{RePEc:inu:caeprp:2009-006,
  author = {Troy Davig and Eric M. Leeper},
  title = {Expectations And Fiscal Stimulus},
  school = {Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington},
  year = {2009},
  number = {2009-006},
  url = {http://www.iub.edu/ caepr/RePEc/PDF/2009/CAEPR2009-006.pdf}
}
Favero, C. and Giavazzi, F. Debt and the Effects of Fiscal Policy 2007 (12822)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: A shift in taxes or in government spending (a "fiscal shock") at some point in time puts a constraint on the path of taxes and spending in the future, since the government intertemporal budget constraint will eventually have to be met. This simple fact is surprisingly overlooked in analyses of the effects of fiscal policy based on Vector AutoRegressive models. We study the effects of fiscal shocks keeping track of the debt dynamics that arises following a fiscal shock, and allowing for the possibility that taxes, spending and interest rates might respond to the level of the debt, as it evolves over time. We show that omitting a debt feedback can result in incorrect estimates of the dynamic effects of fiscal shocks. In particular, the absence of an effect of fiscal shocks on long-term interest rates -- a frequent finding in studies that omit a debt feedback -- can be explained by their mis-specification. Using data for the U.S. economy and two alternative identification assumptions we reconsider the effects of fiscal policy shocks correcting for these shortcomings.
BibTeX:
@techreport{RePEc:nbr:nberwo:12822,
  author = {Carlo Favero and Francesco Giavazzi},
  title = {Debt and the Effects of Fiscal Policy},
  school = {National Bureau of Economic Research, Inc},
  year = {2007},
  number = {12822},
  url = {http://www.nber.org/papers/w12822.pdf}
}
Leeper, E.M., Walker, T.B. and Yang, S.-C.S. Government Investment and Fiscal Stimulus in the Short and Long Runs 2009 (15153)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper contributes to the debate about fiscal multipliers by studying the impacts of government investment in conventional neoclassical growth models. The analysis focuses on two dimensions of fiscal policy that are critical for understanding the effects of government investment: implementation delays associated with building public capital projects and expected future fiscal adjustments to debt-financed spending. Implementation delays can produce small or even negative labor and output responses in the short run; anticipated fiscal financing adjustments matter both quantitatively and qualitatively for long-run growth effects. Taken together, these two dimensions have important implications for the short-run and long-run impacts of fiscal stimulus in the form of higher government infrastructure investment. The analysis is conducted in several models with features relevant for studying government spending, including utility-yielding government consumption, time-to-build for private investment, and government production.
BibTeX:
@techreport{RePEc:nbr:nberwo:15153,
  author = {Eric M. Leeper and Todd B. Walker and Shu-Chun Susan Yang},
  title = {Government Investment and Fiscal Stimulus in the Short and Long Runs},
  school = {National Bureau of Economic Research, Inc},
  year = {2009},
  number = {15153},
  url = {http://www.nber.org/papers/w15153.pdf}
}
Favero, C. and Giavazzi, F. How large are the effects of tax changes? 2009 (15303)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: We use the time series of shifts in U.S. Federal tax liabilities constructed by Romer and Romer to estimate tax multipliers. Differently from the single-equation approach adopted by Romer and Romer, our estimation strategy (a Var that includes output, government spending and revenues, inflation and the nominal interest rate) does not rely upon the assumption that tax shocks are orthogonal to each other as well as to lagged values of other macro variables. Our estimated multiplier is much smaller: one, rather than three at a three-year horizon. When we split the sample in two sub-samples (before and after 1980) we find, before 1980, a multiplier whose size is never greater than one, after 1980 a multiplier not significantly different from zero. Following the findings in Bohn (1998), we also experiment with a model that includes debt and the non-linear government budget constraint. We find that, while in general not very important, the non-linearity that arises from the budget constraint makes a difference after 1980, when the response of fiscal variables to the level of the debt becomes stronger.
BibTeX:
@techreport{RePEc:nbr:nberwo:15303,
  author = {Carlo Favero and Francesco Giavazzi},
  title = {How large are the effects of tax changes?},
  school = {National Bureau of Economic Research, Inc},
  year = {2009},
  number = {15303},
  url = {http://www.nber.org/papers/w15303.pdf}
}
Leeper, E.M., Traum, N. and Walker, T.B. Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis 2015 (21433)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: We use Bayesian prior and posterior analysis of a monetary DSGE model, extended to include fiscal details and two distinct monetary-fiscal policy regimes, to quantify government spending multipliers in U.S. data. The combination of model specification, observable data, and relatively diffuse priors for some parameters lands posterior estimates in regions of the parameter space that yield fresh perspectives on the transmission mechanisms that underlie government spending multipliers. Posterior mean estimates of short-run output multipliers are comparable across regimes—about 1.4 on impact—but much larger after 10 years under passive money/active fiscal than under active money/passive fiscal—means of 1.9 versus 0.7 in present value.
BibTeX:
@techreport{RePEc:nbr:nberwo:21433,
  author = {Eric M. Leeper and Nora Traum and Todd B. Walker},
  title = {Clearing Up the Fiscal Multiplier Morass: Prior and Posterior Analysis},
  school = {National Bureau of Economic Research, Inc},
  year = {2015},
  number = {21433},
  url = {http://www.nber.org/papers/w21433.pdf}
}
Burnside, C., Eichenbaum, M. and Fisher, J.D. Assessing the Effects of Fiscal Shocks 2000 (7459)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper investigates the response of real wages and hours worked to an exogenous shock in fiscal policy. We identify this shock with the dynamic response of government purchases and tax rates to an exogenous increase in military purchases. The fiscal shocks that we isolate are characterized by highly correlated increases in government purchases, tax rates and hours worked as well as persistent declines in real wages. We assess the ability of standard Real Business Cycle models to account for these facts. They can-but only under the assumption that marginal income tax rates are constant, a standard assumption in the literature. Once we abandon this counterfactual assumption, RBC models cannot account for the facts. We argue that our empirical findings pose a challenge to a wide class of business cycle models.
BibTeX:
@techreport{RePEc:nbr:nberwo:7459,
  author = {Craig Burnside and Martin Eichenbaum and Jonas D.M. Fisher},
  title = {Assessing the Effects of Fiscal Shocks},
  school = {National Bureau of Economic Research, Inc},
  year = {2000},
  number = {7459},
  url = {http://www.nber.org/papers/w7459.pdf}
}
Leeper, E.M. Fiscal Policy and Inflation: Pondering the Imponderables 2003 (9506)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: An asset-pricing perspective on inflation reveals that it depends on current and expected monetary and fiscal policies. There are three ways to carry $1 today into the future: money, bonds, and real assets. That dollar's purchasing power varies inversely with the price level. Expected money growth, tax rates, and government spending directly impinge on these expected rates of return of these assets, and determine the price level and the inflation rate. The paper considers a tax reduction that is financed by new government debt. It examines how alternative responses of current and future policies to the tax cut can imply very different outcomes for inflation.
BibTeX:
@techreport{RePEc:nbr:nberwo:9506,
  author = {Eric M. Leeper},
  title = {Fiscal Policy and Inflation: Pondering the Imponderables},
  school = {National Bureau of Economic Research, Inc},
  year = {2003},
  number = {9506},
  url = {http://www.nber.org/papers/w9506.pdf}
}
Fatás, A. Is there a Case for Sophisticated Balanced-Budget Rules? 2005 (466)School: OECD Publishing  techreport URL 
Abstract: This paper reviews the arguments in favor of excluding investment from fiscal policy constraints (the adoption of a “golden rule”). The paper starts by reviewing the goals and motivations of fiscal policy rules. From this analysis, it is clear that answering the question of whether investment should be excluded from those constraints can only be done once the goals and logic of those constraints are made clear. The strongest arguments in favor of a “golden rule” are those of transparency and intergenerational fairness. Other arguments, such as the possibility that public investment pays for itself, do not receive strong empirical support. The paper concludes that for a policy rule to be sustainable and have enough political and public support, it is necessary to have a proper, transparent and, therefore, different accounting treatment for investment. Whether this implies that investment should be completely excluded from fiscal policy constraints is left as an open question.
BibTeX:
@techreport{RePEc:oec:ecoaaa:466-en,
  author = {Antonio Fatás},
  title = {Is there a Case for Sophisticated Balanced-Budget Rules?},
  school = {OECD Publishing},
  year = {2005},
  number = {466},
  url = {http://www.oecd-ilibrary.org/docserver/download/5lgh3djgz4tf.pdf?expires=1475753890&id=id&accname=guest&checksum=57A8C6B3ABB12FC8217619EFB1F1D8BF}
}
Kollmann, R., Leeper, E., Otrok, C. and Roeger, W. Fiscal Policy in the Aftermath of the Crisis 2013 (69897)School: University Library of Munich, Germany  techreport URL 
Abstract: The financial crisis that erupted in 2007 triggered the deepest global recession since the 1930s. In many advanced economies, governments attempted to counter the recession by sizable fiscal stimulus measure. Those measures, and the fall in tax revenues due to the recession, frequently lead to sharp increases in public debt that threaten fiscal sustainability. A key fiscal policy challenge for major advanced economies will be to reduce public deficits and debt over the coming years, without harming real activity. This special issue of the Journal of Economic Dynamics and Control consists of six papers that offer novel empirical and theoretical perspectives on fiscal policy since the outbreak of the financial crisis. All papers were presented at a conference held at the European Commission in Brussels on March 2-3, 2012.
BibTeX:
@techreport{RePEc:pra:mprapa:69897,
  author = {Kollmann, Robert and Leeper, Eric and Otrok, Christopher and Roeger, Werner},
  title = {Fiscal Policy in the Aftermath of the Crisis},
  school = {University Library of Munich, Germany},
  year = {2013},
  number = {69897},
  url = {https://mpra.ub.uni-muenchen.de/69897/1/MPRA_paper_69897.pdf}
}
Christiano, L. and Eichenbaum, M. Assessing the Usefulness of Structural Vector Autoregressions 2005 (902)School: Society for Economic Dynamics  techreport URL 
Abstract: No abstract is available for this item.
BibTeX:
@techreport{RePEc:red:sed005:902,
  author = {Lawrence Christiano and Martin Eichenbaum},
  title = {Assessing the Usefulness of Structural Vector Autoregressions},
  school = {Society for Economic Dynamics},
  year = {2005},
  number = {902},
  url = {http://faculty.wcas.northwestern.edu/ lchrist/research/VAR/march212006rjv.pdf}
}
Straub, R. and Coenen, G. Non-Ricardian Households and Fiscal Policy in an Estimated DSGE Model of the Euro Area 2005 (102)School: Society for Computational Economics  techreport URL 
Abstract: In this paper, we revisit the effects of government spending shocks on private aggregate consumption within an estimated New-Keynesian DSGE model of the euro area featuring non-Ricardian households and a relatively detailed fiscal policy set up. Employing Bayesian inference methods, we show that the presence of non-Ricardian households is in general conducive to raising the level of aggregate consumption in response to government spending shocks when compared with the benchmark specification without non-Ricardian households. As a practical matter, however, we find that there is only a fairly small chance that government spending shocks crowd in aggregate consumption, mainly because the estimated share of non-Ricardian households is relatively low, but also due to the large negative wealth effect induced by the highly persistent nature of government spending shocks
BibTeX:
@techreport{RePEc:sce:scecf5:102,
  author = {Roland Straub and Günter Coenen},
  title = {Non-Ricardian Households and Fiscal Policy in an Estimated DSGE Model of the Euro Area},
  school = {Society for Computational Economics},
  year = {2005},
  number = {102},
  url = {http://repec.org/sce2005/up.18782.1106607871.pdf}
}
Hollmayr, J. and Matthes, C. Tales of transition paths: Policy uncertainty and random walks 2015 (14/2015)School: Deutsche Bundesbank, Research Centre  techreport URL 
Abstract: What happens when fiscal and/or monetary policy changes systematically? We construct a DSGE model in which agents have to estimate fiscal and monetary policy rules and assess how uncertainty surrounding the conduct of policymakers influences transition paths after policy changes. We find that policy changes of the magnitude often considered in the literature can lead private agents to hold substantially different views about the nature of equilibrium than would be predicted by a full information analysis. In particular, random walk-like behavior can be observed for a large number of periods in equilibrium, even though the models we use admit stationary dynamics under full-information rational expectations.
BibTeX:
@techreport{RePEc:zbw:bubdps:142015,
  author = {Hollmayr, Josef and Matthes, Christian},
  title = {Tales of transition paths: Policy uncertainty and random walks},
  school = {Deutsche Bundesbank, Research Centre},
  year = {2015},
  number = {14/2015},
  url = {https://www.econstor.eu/bitstream/10419/111919/1/829616101.pdf}
}
Hollmayr, J. and Matthes, C. Dynamics of Monetary-Fiscal Interaction under Learning 2014 (100609)School: Verein für Socialpolitik / German Economic Association  techreport URL 
Abstract: The interaction between monetary and fiscal policy and the associated uncertainty about this interaction have been put on center stage by the recent financial crisis and the associated recession. In our model agents learn about both fiscal and monetary policy rules via the Kalman Filter. In particular, we study how an economy populated with agents acting as econometricians reacts to discrete changes in the actual policy rules.
BibTeX:
@techreport{RePEc:zbw:vfsc14:100609,
  author = {Hollmayr, Josef and Matthes, Christian},
  title = {Dynamics of Monetary-Fiscal Interaction under Learning},
  school = {Verein für Socialpolitik / German Economic Association},
  year = {2014},
  number = {100609},
  url = {https://www.econstor.eu/bitstream/10419/100609/1/VfS_2014_pid_222.pdf}
}
Ricco, G., Callegari, G. and Cimadomo, J. Signals from the Government: Policy Uncertainty and the Transmission of Fiscal Shocks 2014 (56136)School: University Library of Munich, Germany  techreport URL 
Abstract: In this paper, we investigate the influence of fiscal policy uncertainty in the propagation of government spending shocks in the US economy. We propose a new index to measure fiscal policy uncertainty which relies on the dispersion of government spending forecasts as presented in the Survey of Professional Forecasters (SPF). This new index is solely focused on the uncertainty surrounding federal spending and is immune from the influence of general macroeconomic uncertainty by as much as is possible. Our results indicate that, in times of elevated fiscal policy uncertainty, the output response to policy announcements about future government spending growth is muted. Instead, periods of low policy uncertainty are characterised by a positive and persistent output response to fiscal announcements. Our analysis also shows that the stronger effects of fiscal policy in less uncertain times is mainly the result of agents� tendency to increase investment decisions in these periods, in line with the prediction of the option value theory in Bernanke (1983).
BibTeX:
@techreport{Ricco2014,
  author = {Ricco, Giovanni and Callegari, Giovanni and Cimadomo, Jacopo},
  title = {Signals from the Government: Policy Uncertainty and the Transmission of Fiscal Shocks},
  school = {University Library of Munich, Germany},
  year = {2014},
  number = {56136},
  url = {https://mpra.ub.uni-muenchen.de/56136/1/MPRA_paper_56136.pdf}
}
Richardson, P., Giorno, C. and Thurman, S. Macroeconomic Performance and Fiscal Policy Adjustments in the Medium Term: Alternative Medium-Term Scenarios 1994 (148)School: OECD Publishing  techreport URL 
Abstract: This paper describes a number of alternative medium-term scenarios for the OECD economies and related policy stimulations using the OECD world model INTERLINK. The starting point of the analysis is a reference scenario to 2000 featuring a general recovery of the OECD economies to steady state noninflationary growth. The paper goes on to examine the implications of slower growth for the paths of fiscal balance and public debt, and the changes in policy mix which might be necessary to restore announced fiscal policy objectives whilst limiting damage to the wider range of policy objectives. A further section goes on to examine the simulated effects of changes of fiscal and monetary policy stance on output, employment, inflation and public debt over the medium term.
BibTeX:
@techreport{Richardson1994,
  author = {Pete Richardson and Claude Giorno and Stephan Thurman},
  title = {Macroeconomic Performance and Fiscal Policy Adjustments in the Medium Term: Alternative Medium-Term Scenarios},
  school = {OECD Publishing},
  year = {1994},
  number = {148},
  url = {http://www.oecd-ilibrary.org/docserver/download/5lgsjhvj8741.pdf?expires=1473339585&id=id&accname=guest&checksum=66E3A0842C5610C4A50351C0716132AB}
}
Rosengren, E.S. Implications of fiscal austerity for U. S. monetary policy 2013 (72)School: Federal Reserve Bank of Boston  techreport URL 
Abstract: Remarks by Eric S. Rosengren, President and Chief Executive Officer, Federal Reserve Bank of Boston, at The Global Interdependence Center Central Banking Conference, Milan, Italy, May 16, 2013.
BibTeX:
@techreport{Rosengren2013,
  author = {Eric S. Rosengren},
  title = {Implications of fiscal austerity for U. S. monetary policy},
  school = {Federal Reserve Bank of Boston},
  year = {2013},
  number = {72},
  url = {http://www.bostonfed.org/news/speeches/rosengren/2013/051613/051613figuresandcomments.pdf}
}
Schmitt-Grohé, S. and Uribe, M. Optimal Simple and Implementable Monetary and Fiscal Rules: Expanded Version 2006 (12402)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper computes welfare-maximizing monetary and fiscal policy rules in a real business cycle model augmented with sticky prices, a demand for money, taxation, and stochastic government consumption. We consider simple feedback rules whereby the nominal interest rate is set as a function of output and inflation, and taxes are set as a function of total government liabilities. We implement a second-order accurate solution to the model. Our main findings are: First, the size of the inflation coefficient in the interest-rate rule plays a minor role for welfare. It matters only insofar as it affects the determinacy of equilibrium. Second, optimal monetary policy features a muted response to output. More importantly, interest rate rules that feature a positive response to output can lead to significant welfare losses. Third, the welfare gains from interest-rate smoothing are negligible. Fourth, optimal fiscal policy is passive. Finally, the optimal monetary and fiscal rule combination attains virtually the same level of welfare as the Ramsey optimal policy.
BibTeX:
@techreport{Schmitt-Grohe2006a,
  author = {Stephanie Schmitt-Grohé and Martín Uribe},
  title = {Optimal Simple and Implementable Monetary and Fiscal Rules: Expanded Version},
  school = {National Bureau of Economic Research, Inc},
  year = {2006},
  number = {12402},
  url = {http://www.nber.org/papers/w12402.pdf}
}
Schwarzmüller, T. and Wolters, M. The Macroeconomic Effects of Fiscal Consolidation in Dynamic General Equilibrium 2014 (1963)School: Kiel Institute for the World Economy  techreport URL 
Abstract: We provide a systematic analysis of fiscal consolidation in a medium-scale dynamic general equilibrium model. Our results show that the choice of the consolidation instrument is very important, not only with respect to the short- and long-run output effects of the different consolidation strategies, but also regarding the welfare effects and the distributional consequences. Moreover, we show that these aspects become even more important if fiscal consolidation has to be conducted at a binding zero lower bound on nominal interest rates because in this case the negative short-run output costs increase. Our comprehensive analysis of the transmission channels of various fiscal consolidation measures shows that in particular the presence of credit-constrained households who cannot smooth consumption has a large impact on the overall output and welfare effects of fiscal consolidation. Further, it turns out to be important whether a fiscal instrument directly affects private production factors negatively as it is the case for consolidation via government investment and taxes on labor and capital. In these cases the short-run output contraction is large and persistent because either the private or the public capital stock decreases. By contrast, for a consolidation via government consumption, transfers or the consumption tax rate, output recovers much faster
BibTeX:
@techreport{Schwarzmueller2014,
  author = {Tim Schwarzmüller and Maik Wolters},
  title = {The Macroeconomic Effects of Fiscal Consolidation in Dynamic General Equilibrium},
  school = {Kiel Institute for the World Economy},
  year = {2014},
  number = {1963},
  url = {https://www.ifw-members.ifw-kiel.de/publications/the-macroeconomic-effects-of-fiscal-1/KWP_1963.pdf}
}
Sims, E.R. News, Non-Invertibility, and Structural VARs 2012 (013)School: University of Notre Dame, Department of Economics  techreport URL 
Abstract: A state space representation of a linearized DSGE model implies a VAR in terms of observable variables. The model is said be non-invertible if there exists no linear rotation of the VAR innovations which can recover the economic shocks. Non-invertibility arises when the observed variables fail to perfectly reveal the state variables of the model. The imperfect observation of the state drives a wedge between the VAR innovations and the deep shocks, potentially invalidating conclusions drawn from structural impulse response analysis in the VAR. The principal contribution of this paper is to show that non-invertibility should not be thought of as an ``either/or'' proposition even when a model has a non-invertibility, the wedge between VAR innovations and economic shocks may be small, and structural VARs may nonetheless perform reliably. As an increasingly popular example, so-called ``news shocks'' generate foresight about changes in future fundamentals such as productivity, taxes, or government spending and lead to an unassailable missing state variable problem and hence non-invertible VAR representatations. Simulation evidence from a medium scale DSGE model augmented with news shocks about future productivity reveals that structural VAR methods often perform well in practice, in spite of a known non-invertibility. Impulse responses obtained from VARs closely correspond to the theoretical responses from the model, and the estimated VAR responses are successful in discriminating between alternative, nested specifications of the underlying DSGE model. Since the non-invertibility problem is, at its core, one of missing information, conditioning on more information, for example through factor augmented VARs, is shown to either ameliorate oreliminate invertibility problems altogether.
BibTeX:
@techreport{Sims2012,
  author = {Eric R. Sims},
  title = {News, Non-Invertibility, and Structural VARs},
  school = {University of Notre Dame, Department of Economics},
  year = {2012},
  number = {013},
  url = {http://www3.nd.edu/ tjohns20/RePEc/deendus/wpaper/013_vars.pdf}
}
Sims, E. and Wolff, J. The Output and Welfare Effects of Government Spending Shocks over the Business Cycle 2013 (19749)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper studies the state-dependence of the output and welfare effects of shocks to government purchases in a canonical medium scale DSGE model. When monetary policy is characterized by a Taylor rule, the output multiplier (the change in output for a one unit change in government spending) is countercyclical but close to constant across states of the business cycle, whereas the welfare multiplier (the consumption equivalent change in a measure of aggregate welfare for the same change in government spending) is quite volatile and procyclical. These results are robust to different means of fiscal finance. When the nominal interest rate is unresponsive to economic conditions, such as would be the case at the zero lower bound, both the output and welfare multipliers are larger and move significantly more across states than under a Taylor rule. The welfare multiplier is still procyclical under passive monetary policy, albeit less so than under a Taylor rule.
BibTeX:
@techreport{Sims2013,
  author = {Eric Sims and Jonathan Wolff},
  title = {The Output and Welfare Effects of Government Spending Shocks over the Business Cycle},
  school = {National Bureau of Economic Research, Inc},
  year = {2013},
  number = {19749},
  url = {http://www.nber.org/papers/w19749.pdf}
}
Smith, J.M. and Taylor, J.B. The Long and the Short End of the Term Structure of Policy Rules 2007 (13635)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: We first document a large secular shift in the estimated response of the entire term structure of interest rates to inflation and output in the United States. The shift occurred in the early 1980s. We then derive an equation that links these responses to the coefficients of the central bank's monetary policy rule for the short-term interest rate. The equation reveals two countervailing forces that help explain and understand the nature of the link and how its sign is determined. Using this equation, we show that a shift in the policy rule in the early 1980s provides an explanation for the observed shift in the term structure. We also explore a shift in the policy rule in the 2002-2005 period and its possible effect on long-term rates.
BibTeX:
@techreport{Smith2007,
  author = {Josephine M. Smith and John B. Taylor},
  title = {The Long and the Short End of the Term Structure of Policy Rules},
  school = {National Bureau of Economic Research, Inc},
  year = {2007},
  number = {13635},
  url = {http://www.nber.org/papers/w13635.pdf}
}
Stockhammer, E., Qazizada, W. and Gechert, S. Demand effects of fiscal policy since 2008 2016 (2016-8)School: School of Economics, Kingston University London  techreport URL 
Abstract: The Great Recession 2007-09 has led to controversies around the role of fiscal policy. Academically this has translated into renewed interest in the effects of fiscal policy. Several studies have since suggested that fiscal multipliers are substantially larger in downswings or depressions than in the upswing. In terms of economic policy reactions countries have differed substantially in the fiscal stance. It is an important open question how big the impact of these policies on economic growth has been. The paper uses the regime-dependent multiplier estimates by Qazizada and Stockhammer (2015) and by Gechert and Rannenberg (2014) to calculate the demand effects of fiscal policy for Germany, USA, UK, Greece, Ireland, Italy, Portugal and Spain since 2008. This allows assessing to what extent fiscal policy explains different economic performances across countries. We find expansionary fiscal policy in 2008/09 in all countries, but since 2010 fiscal policies have differed. While the fiscal impact was roughly neutral in Germany, the UK, and the USA, it was large and negative in Greece, Ireland, Italy, Portugal, and Spain.
BibTeX:
@techreport{Stockhammer2016,
  author = {Stockhammer, Engelbert and Qazizada, Walid and Gechert, Sebastian},
  title = {Demand effects of fiscal policy since 2008},
  school = {School of Economics, Kingston University London},
  year = {2016},
  number = {2016-8},
  url = {http://staffnet.kingston.ac.uk/ku33681/RePEc/kin/papers/2016_008.pdf}
}
Taylor, J.B. The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong 2009 (14631)School: National Bureau of Economic Research, Inc  techreport URL 
Abstract: This paper is an empirical investigation of the role of government actions and interventions in the financial crisis that flared up in August 2007. It integrates and summarizes several ongoing empirical research projects with the aim of learning from past policy. The evidence is presented in a series of charts which are backed up by statistical analysis in these research projects.
BibTeX:
@techreport{Taylor2009,
  author = {John B. Taylor},
  title = {The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong},
  school = {National Bureau of Economic Research, Inc},
  year = {2009},
  number = {14631},
  url = {http://www.nber.org/papers/w14631.pdf}
}
Taylor, J. Using Hybrid Macro-Econometric Models to Design and Evaluate Fiscal Consolidation Strategies 2015 (15117)School: Hoover Institution, Stanford University  techreport URL 
Abstract: This paper examines the use of hybrid economic models in the design and evaluation of multi-year fiscal consolidation strategies. In the United States, the Congressional Budget Office (CBO) has the responsibility for estimating the impact of such strategies. The CBO uses one type of model to estimate the short-run impact of the policy and another type of model to estimate the long-run impact. The two impacts are then spliced together in an ad hoc way. In principle it would be better to use one complete model "a hybrid model" in which the short-run and long-run decisions of people interact according basic dynamic economic theory. The key question is how, and how well, such an approach can be used in practice. To address this question, two periods of U.S. history are examined. In each period hybrid models had a role in the design or evaluation of such strategies, and their predictions were consistent with the outcomes. The results show that large multi-year credible deficit reduction plans can have positive effects in the short run and the long-run, a result that differs from the splicing approach in which the short run effects are always negative even for gradual phased-in credible plans.
BibTeX:
@techreport{Taylor2015,
  author = {Taylor, John},
  title = {Using Hybrid Macro-Econometric Models to Design and Evaluate Fiscal Consolidation Strategies},
  school = {Hoover Institution, Stanford University},
  year = {2015},
  number = {15117},
  url = {http://web.stanford.edu/ johntayl/2015_pdfs/Hybrid_Models_and_Fiscal_Consolidation-Econometric_Society-Jan2015.pdf}
}
Uhlig, H. Long Term Debt and the Political Support of a Monetary Union 1997 (1603)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: This paper examines the role of long-term debt in political support for a monetary union or, more generally, an inflation-reduction policy. The central idea is that the decision on membership of the union leads to a redistribution between debtors and creditors, if they are holding long-term debt with a nominally fixed interest rate, as well as taxpayers. For example, if joining the union means a decrease in the inflation rate, creditors should favour joining while debtors should be against it. A government of a high-inflation country might strategically try to exploit this effect by selling more long-term debt denominated in its own currency at a fixed nominal rate rather than a foreign currency such as the dollar (or, almost equivalently, as floating-rate debt or rolled-over short-term debt) to its citizens. We show that the effect on political support is unclear. While the "creditor effect" of increasing the number of agents holding domestically denominated debt helps generate support for joining the union, the "tax effect" of having to raise more taxes in order to pay for the increased real-debt payments after a successful monetary union works in the opposite way. The paper then studies a number of special cases and ramifications; the case of Italy is examined more closely. The paper argues that recent debt-management policy in Italy probably eroded political support for actions aimed at enhancing EMU membership chances.
BibTeX:
@techreport{Uhlig1997,
  author = {Uhlig, Harald},
  title = {Long Term Debt and the Political Support of a Monetary Union},
  school = {C.E.P.R. Discussion Papers},
  year = {1997},
  number = {1603},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=1603}
}
Uhlig, H. One Money, but Many Fiscal Policies in Europe: What Are the Consequences? 2002 (3296)School: C.E.P.R. Discussion Papers  techreport URL 
Abstract: This Paper outlines some issues regarding the interaction of independent fiscal authorities and one central bank in the European monetary union. It points out the possibilities for coordination failures, ranging everywhere from potentially excessive deficits and free-riding problems to coordination failures in European fiscal or banking crises. As policy conclusions, some suggestions for institutional improvements are made. In particular, the Growth and Stability Pact needs strengthening rather than weakening. Furthermore, a solution for EMU-wide banking regulation needs to be found.
BibTeX:
@techreport{Uhlig2002,
  author = {Uhlig, Harald},
  title = {One Money, but Many Fiscal Policies in Europe: What Are the Consequences?},
  school = {C.E.P.R. Discussion Papers},
  year = {2002},
  number = {3296},
  url = {http://cepr.org/active/publications/discussion_papers/dp.php?dpno=3296#}
}
Ulla, P. Assessing Fiscal Risks through Long-term Budget Projections 2006
Vol. 6School: OECD 
techreport URL 
Abstract: Long-term budget projections are in their infancy. The method described here is a bottom-up approach to measure future fiscal challenges. The sustainability criteria must be regarded as restrictions of the total fiscal aggregates, confronting bottom-up projections with top-down limits. Uncertainties have often given long-term projections little credibility; sensitivity analysis has to be done. This article discusses the main reasons for uncertainty and how to handle them. In most OECD countries the increase in the elderly population is not only a transitory problem created by high fertility rates after the Second World War. Higher longevity will create permanent higher old-age dependency rates in the future. Some projections even indicate that those rates will increase after the baby-boom generation is gone. Thus it is necessary to consider both how pension reforms are formulated and a broader agenda for reform of the public sector. Given the lower supply of labour, it may be important to modernise the public sector and create less public demand for labour. In many countries, policy reforms will be necessary to create fiscal sustainability to avoid future fiscal risks.
BibTeX:
@techreport{Ulla2006,
  author = {Pal Ulla},
  title = {Assessing Fiscal Risks through Long-term Budget Projections},
  school = {OECD},
  year = {2006},
  volume = {6},
  url = {http://www.oecd-ilibrary.org/governance/assessing-fiscal-risks-through-long-term-budget-projections_budget-v6-art5-en}
}
Uribe, M. and Schmitt-Grohe, S. Optimal fiscal and monetary policy under sticky prices 2001 Proceedings(Jun)School: Federal Reserve Bank of San Francisco  techreport URL 
Abstract: This paper studies optimal fiscal and monetary policy under sticky product prices. The theoretical framework is a stochastic production economy without capital. The government finances an exogenous stream of purchases by levying distortionary income taxes, printing money, and issuing one-period nominally risk free bonds. The main findings of the paper are: First, for a miniscule degree of price stickiness (i.e., many times below available empirical estimates), the optimal volatility of inflation is near zero. This result stands in stark contrast with the high volatility of inflation implied by the Ramsey allocation when prices are flexible. The finding is in line with a recent body of work on optimal monetary policy under nominal rigidities that ignores the role of optimal fiscal policy. Second, even small deviations from full price flexibility induce near random walk behavior in government debt and tax rates. Third, sluggish price adjustment raises the average nominal interest rate above the one called for by the Friedman rule. Finally, an interest-rate feedback rule whereby the nominal interest rate depends on inflation and output fits well the data emanating from the Ramsey economy. However, the fitted rule is not of the Taylor type, for the implied inflation coefficient is less than one and close to zero and the output coefficient is negative.
BibTeX:
@techreport{Uribe2001,
  author = {Martin Uribe and Stephanie Schmitt-Grohe},
  title = {Optimal fiscal and monetary policy under sticky prices},
  journal = {Proceedings},
  school = {Federal Reserve Bank of San Francisco},
  year = {2001},
  number = {Jun},
  url = {http://www.frbsf.org/economic-research/files/conf6b.pdf}
}
Van Brusselen, P. Fiscal stabilisation plans and the outlook for the world economy 2010 Bank of Italy Occasional PaperSchool: Bank of Italy  techreport URL 
Abstract: The topic of counter-cyclical fiscal policies has been put squarely under the spotlights since the outbreak of the current world-wide financial and economic crisis in September 2008. As governments have devised billion dollar stimulus packages, debates have raged in both the media and academia surrounding the effectiveness of such measures. This paper brings together material written on fiscal stabilisation plans in 2009 and a more recent macroeconomic projection for the world economy, which was made in early 2010. It attempts to provide an overview of the theory and empirical evidence on the effects of fiscal policies, placed in the current context of global recession and financial distress. It then goes on to address the question of where the world economy is headed given the now generally unsustainably high levels of public sector deficits and debt and given the possibility that the global financial crisis will have lasting adverse effects on potential output levels. This text is a very much abridged version of the full paper (80 pages in length) that was presented at the Bank of Italy's Fiscal Policy Workshop, held in Perugia on 25 27 March 2010. The full paper can be obtained upon simple email request sent to the author.
BibTeX:
@techreport{VanBrusselen2010,
  author = {Van Brusselen, Patrick},
  title = {Fiscal stabilisation plans and the outlook for the world economy},
  journal = {Bank of Italy Occasional Paper},
  school = {Bank of Italy},
  year = {2010},
  url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1985198}
}
Warmedinger, T., Checherita-Westphal, C. and Hernández de Cos, P. Fiscal multipliers and beyond 2015 (162)School: European Central Bank  techreport URL 
Abstract: This paper seeks to link the debate surrounding short-term fiscal multipliers with the medium and longer-term impact of fiscal consolidation on public debt sustainability. A literature review and empirical findings for state-dependent multipliers confirm that there is considerable uncertainty surrounding the size of the short-term multiplier. Notably, multipliers may be larger in deep recessions or financial crises, but the negative impact of fiscal consolidation is mitigated when public finances are weak. Using a stylised framework and a range of plausible values for the fiscal multiplier, simulations suggest that an increase in the debt ratio following episodes of fiscal consolidation is likely to be short-lived. Even in a macroeconomic context in which multipliers are high, a front-loaded fiscal consolidation reduces the total consolidation effort and implies a faster stabilisation of the debt ratio. In general, back-loading is subject to higher implementation risks, most notably in the light of political economy considerations. Overall, when determining the fiscal adjustment path, both the short-term costs and the longer-term benefits need to be taken into account. Particular attention should be paid to the composition of consolidation packages, with well-designed adjustments likely to imply a faster stabilisation of the debt ratio. JEL Classification: H30, H6, E6
BibTeX:
@techreport{Warmedinger2015,
  author = {Warmedinger, Thomas and Checherita-Westphal, Cristina and Hernández de Cos, Pablo},
  title = {Fiscal multipliers and beyond},
  school = {European Central Bank},
  year = {2015},
  number = {162},
  url = {http://www.ecb.europa.eu/pub/pdf/scpops/ecbop162.en.pdf}
}
Yang, S.-C.S. A Chronology Of Postwar U.S. Federal Income Tax Policy 2007 (2007-021)School: Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington  techreport URL 
Abstract: This note provides a chronology of major tax events that involved changes in federal taxes on individual and corporate income from 1948 to 2006. For each event, the note provides background and policy motivation, major provisions, legislative timeline, and estimated revenue changes. As most tax changes were preceded by extensive legislative delays, this chronology suggests that people were likely to have foreknowledge about tax policy. It also finds that postwar income tax policy was typically motivated by one of three rationales: 1) balancing the budget or reducing deficits, 2) controlling inflation, and 3) stimulating economic activity or promoting growth.
BibTeX:
@techreport{Yang2007,
  author = {Shu-Chun Susan Yang},
  title = {A Chronology Of Postwar U.S. Federal Income Tax Policy},
  school = {Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington},
  year = {2007},
  number = {2007-021},
  url = {http://www.iub.edu/ caepr/RePEc/PDF/2007/CAEPR2007-021.pdf}
}
Zubairy, S. Explaining the Effects of Government Spending Shocks 2010 (26051)School: University Library of Munich, Germany  techreport URL 
Abstract: The objective of this paper is to identify and explain effects of a government spending shock. After accounting for large military events, I find that in response to a structural unanticipated government spending shock, output, hours, consumption and wages all rise, whereas investment falls on impact. I construct and estimate a dynamic general equilibrium model featuring deep habit formation and show that it successfully explains these effects. In particular, deep habits give rise to countercyclical markups and thus act as transmission mechanism for the effects of government spending shocks on private consumption and wages. In addition, I show that deep habits significantly improve the fit of the model compared to a model with habit formation at the level of aggregate goods.
BibTeX:
@techreport{Zubairy2010,
  author = {Zubairy, Sarah},
  title = {Explaining the Effects of Government Spending Shocks},
  school = {University Library of Munich, Germany},
  year = {2010},
  number = {26051},
  url = {https://mpra.ub.uni-muenchen.de/26051/1/MPRA_paper_26051.pdf}
}