shocks. An appealing feature of identifying a fiscal shock with an external instrument is that one can find the effects of … that shock without fully identifying the SVAR. But we show that fully or almost fully instrumenting the SVAR allows one to … overidentify the model by restricting the shock covariances to be zero. In this application the overidentifying restrictions are …

short term debt financed government spending shock makes it easier for constrained households to meet their spending needs …