Cloyne (2013) constructs a novel dataset documenting fiscal tax shocks in the United Kingdom using the narrative approach developed by Romer and Romer (2010), and estimates the impact of tax changes on GDP. He finds that a tax cut of one percent of GDP causes a 0.6 percent increase in output in...

After the Global Financial Crisis a controversial rush to fiscal austerity followed in many countries. Yet research on the effects of austerity on macroeconomic aggregates was and still is unsettled, mired by the difficulty of identifying multipliers from observational data. This paper...

Do voters punish governments that introduce fiscal "austerity" measures? If so, does voter response vary according to the design (composition) of fiscal adjustments? What determines the timing of fiscal consolidations? The empirical literature on the political economy of fiscal adjustments,...

Identifying fiscal multipliers is usually constrained by the absence of a counterfactual scenario. Our new data set allows overcoming this problem by making use of the fact that recommendations under the EU's excessive deficit procedure (EDP) provide both a baseline no-policy-change scenario and...

Keynesian theory suggests that a reduction in government expenditure has a negative effect on private demand and therefore on output. Contrary, neoclassical theory argues that reduced public expenditure makes room for an expansion of the private sector and thus has a stimulating effect on the...

May 2022 marked the 90th anniversary of the end of Heinrich Brüning’s term as Reich Chancellor. To this day, the economic effects of Brüning’s extreme austerity measures remain unclear. However, new data and calculations have made an initial quantification of the economic consequences of...

The use of large fiscal stimulus packages to dampen the impact of Covid-19 recently has raised concerns about the effectiveness of the discretionary fiscal policy. This paper aims at analysing the feasibility of automatic fiscal stabilisers to mitigate economic fluctuations in the case of...

The cyclicality of fiscal policy in Ireland in the budgetary plans put before parliament and ex-post is considered. Data in budgetary documents and particular econometric estimation procedures help address endogeneity issues and provide numerous variable-estimation procedure combinations for...

This paper analyses the cyclicality of fiscal policy (discretionary versus automatic) for 28 advanced economies over 1995-2021 by paying special attention to the Covid-19 crisis. We find evidence that discretionary fiscal policy during the Covid-19 crisis (2020-2021) was significantly more...

The aim of this study is to determine the nature of the discretionary fiscal policy practiced by non-euro EU member states, namely to deduce some bias for one of the two types of fiscal policies - procyclical or countercyclical. For this purpose, we used time series for the period 1995-2020, of...