This paper studies the effects of fiscal policy response in 118 episodes of systemic banking crisis in advanced and emerging market countries during 1980-2008. It finds that timely countercyclical fiscal measures contribute to shortening the length of crisis episodes by stimulating aggregate...

Intro -- Contents -- I. INTRODUCTION -- II. EMPIRICAL METHODOLOGY AND SAMPLE -- III. GROWTH AND FISCAL ADJUSTMENT IN TRANSITION COUNTRIES: SOME STYLIZED FACTS -- IV. ECONOMETRIC MODEL RESULTS -- V. QUALITATIVE ANALYSIS OF COUNTRY EXPERIENCES -- VI. CONCLUSIONS -- References.

This paper investigates the role of informality in affecting the magnitude of the fiscal multiplier in a panel of 141 countries, using the local projections method. We find a strong negative relationship between the degree of informality and the size of the fiscal multiplier. This result holds...