The authors analyze the effects of government spending cuts on economic activity in an environment of severe fiscal …

This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD … countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under … unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ …

This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD … countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under … unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ …

regime. In this paper we reconsider the transmission of shocks to government spending across these regimes within a standard … horizons. We derive an analytical characterization of the transmission mechanism of expansionary spending policies under a peg … government spending. This drives down private demand even though short-term real rates fall. As this need not be the case under …

regime. In this paper the authors reconsider the transmission of shocks to government spending across these regimes within a … long horizons. The authors derive an analytical characterization of the transmission mechanism of expansionary spending … spending if inflation rises initially. This response drives down private demand even though short-term real rates fall. As this …

include not only tax increases but also sizeable spending cuts. Our paper uses a standard new Keynesian model to show that the … anticipation of such medium-term spending cuts generally enhances the expansionary effect of short-run fiscal stimulus. This … reversal of government spending must not occur too early on the recovery path, or at least must be suitably gradual. …

the evidence. Second, we show that conditional on spending shocks the model predicts a perfect correlation of the budget … balance and the trade balance. Yet, the effect of spending shocks on the trade balance is contained if an economy is not very …