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. Alesina and Perotti (1995) and Alesina and Ardagna (2010) (AAP) show that...

The hosting and bidding for the Olympic Games is a natural experiment to test for anticipation effects in macroeconomics. We examine these effects using panel data for 184 countries during the period 1950-2006. We find that hosting the Games generates positive investment, consumption, and output...

This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector auto-regressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the...

We investigate whether the Fiscal Theory of the Price Level can deliver a reasonable explanation for UK inflation in the 1970s, a period in which the government greatly increased public spending without raising taxes and monetary policy was accommodative. The model is tested for its implied...

The paper presents evidence of an upward ratchet in transfers and taxes in the U.S. around World-War II. This finding is explained within a political-economy framework involving an executive who sets defense spending and the median voter in the population who interacts with a (richer) agenda...

This paper focuses on the obvious: Pareto-improving programmes may fail to improve everyone's lot. Politically, it has often been interpreted as a requirement that a majority should benefit from the change. Events in Central and Eastern Europe suggest otherwise and cast doubt on the relevance of...

In terms of the ratio of its public debt and public deficit to GDP the United States lies in the middle of the pack of industrial countries. The period since 1980 is the only peacetime period outside the Great Depression to see a sustained increase in the debt-GDP ratio. The budgetary...

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...

We assess the cost of different types of terrorist attacks on the growth of output and of its components. Private Consumption and Investment are significantly and negatively affected by all terror indicators, and the largest impact is respectively associated with the number of victims or the...

We provide empirical evidence on two, major war-related, regularities of U.S. fiscal policy. First, while during and around World War I there is a positive correlation between defence spending and civil non-defense spending, this correlation becomes negative during World War II. This may be...