This paper examines the effects of fiscal policy measures on GDP and the government budget balance in a structural VAR model. In order to identify expenditure shocks we follow Blachard/Perotti (2002) and assume that government expenditure is partly predetermined in the budget. For the...

This paper empirically evaluates how fiscal policy reacts to changes in the government's fiscal situation. Utilizing panel data from the German states covering the period from 1992 to 2011, we assess to what extent exogenous changes in tax revenues affect total public revenues, aggregate public...