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The literature on fiscal multipliers finds that spending-based fiscal consolidations tend to have more benign macro-economic consequences than revenue-based consolidations. By directly comparing expost data with consolidation plans, we present evidence of a systematically weaker follow-up of...
Persistent link: https://www.econbiz.de/10013315403
Identifying fiscal multipliers is usually constrained by the absence of a counterfactual scenario. Our new data set allows overcoming this problem by making use of the fact that recommendations under the EU's excessive deficit procedure (EDP) provide both a baseline no-policy-change scenario and...
Persistent link: https://www.econbiz.de/10011916858
Identifying fiscal multipliers is usually constrained by the absence of a counterfactual scenario. Our new data set allows overcoming this problem by making use of the fact that recommendations under the EU's excessive deficit procedure (EDP) provide both a baseline no-policy-change scenario and...
Persistent link: https://www.econbiz.de/10012917733
We propose a novel identification design to estimate the causal effects of systematic monetary policy on the propagation of macroeconomic shocks. The design combines (i) a time-varying measure of systematic monetary policy based on the historical composition of hawks and doves in the Federal...
Persistent link: https://www.econbiz.de/10014543651
Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non-Ricardian) consumers. We show how the interaction of...
Persistent link: https://www.econbiz.de/10011604385
Can discretionary increases in government spending stimulate the economy? We answer this question by taking into account both the information flow on fiscal measures and the role played by information frictions. Using a novel set of empirical proxies for fiscal news and agents’ misperceptions,...
Persistent link: https://www.econbiz.de/10011605858
Recent evidence on the effect of government spending shocks on consumption cannot be easily reconciled with existing optimizing business cycle models. We extend the standard New Keynesian model to allow for the presence of rule-of-thumb (non-Ricardian) consumers. We show how the interaction of...
Persistent link: https://www.econbiz.de/10013319353
for a sample of 160 countries from 1960 to 2000. We argue that the larger size of a country decreases the volatility of …
Persistent link: https://www.econbiz.de/10012770792
This paper analyses the effects in terms of size and volatility of government revenue and spending on growth in OECD … taxes (size and volatility); ii) social contributions (size and volatility); iii) government consumption (size and … volatility); iv) subsidies (size); and v) government investment (volatility) have a sizeable, negative and statistically …
Persistent link: https://www.econbiz.de/10013316642
We study optimal monetary and fiscal policy in a New Keynesian model where occasional declines in agents' confidence can give rise to persistent liquidity trap episodes. Unlike in the case of fundamental-driven liquidity traps, there is no straightforward recipe for mitigating the welfare costs...
Persistent link: https://www.econbiz.de/10012142148