News - or foresight - about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to recover the structural shocks to which economic agents react. Using tax policies as a leading...

This paper studies how fiscal policy affects loan market conditions in the US. First, itconducts a Structural Vector-Autoregression analysis showing that the bank spread respondsnegatively to an expansionary government spending shock, while lending increases. Second,it illustrates that these...