Using a large information Bayesian VAR, we approximate the flow of information received by economic agents to investigate the effects of government spending. We document robust evidence that insufficiency of information in conventional models could explain inconsistent results across samples and...

We study the relationship between discretionary fiscal policy and macroeconomic stability in 21 OECD countries over the 1985-2012 period. The novelties of our contribution lie in the use of annual panel data, whereas most of the existing evidence is cross-sectional, and more importantly in the...

This paper provides novel evidence on the time varying impact of government spending shocks on output in Germany over the years 1970 to 2013. In a first step, I use an expectations-augmented vector autoregressive model with time varying parameters (TVP-VAR) to show that fiscal multipliers are...

I examine fiscal policy uncertainty in a context where market participants learn about the conduct of fiscal policy with regression rules for dependent variables including tax revenue, net transfers, government spending, and government debt. The explanatory variables include lagged fiscal...

Recent literature on Political Budget Cycles has provided appealing evidence that their existence is conditional to country specific characteristics. In this paper we hypothesize that the level of social capital prevailing in a country might be an underlying fundamental reason that might be...

This paper studies sectoral effects of fiscal spending. We estimate a New Keynesian model with search and matching frictions and two sectors. Fiscal spending is either wasteful (consumption) or productivity enhancing (investment). Using U.S. data we find significant differences across sectors....

It is commonly believed that public investments play a central role in Japan's discretionary fiscal policies, but the majority is implemented by local governments. After distinguishing between public investment by the central government and that by local governments, this paper utilizes wavelet...

The recent sovereign debt crisis has renewed the interest in fiscal consolidation policies and the associated output losses they entail. However, countries that adopted such policies are also plagued by persistent unemployment, and debt reduction ought to magnify the problem. This paper extends...

The Global Financial Crisis of 2007--2009 and its aftermath have called for a rethink of the role of money in shaping business cycle fluctuations. To this end, this paper studies a New Keynesian model with money (liquidity). In the model, agents hold government money and other financial assets....

Economic growth data does not show how such growth was achieved. Was it based on income growth and consumption spending levels or was it based on borrowings to extend the income levels? The question is vital for deciding which economic tools work best for correcting imbalances. The main...