This paper gauges the potential effects on employment of rebalancing China's exportoriented growth model toward domestic demand, particularly private consumption. Shifting to a private consumption-led growth likely means more demand for existing and new services as well as reorienting the...

This paper uses VAR models to examine the magnitude and sources of growth spillovers to the Baltics from key trading partners, as well asfrom the real effective exchange rate (REER). Our results show there are significant cross-country spillovers to the Baltics with those from the EU outweighing...

The impact of fiscal stimulus depends not only on short-term tax and spending policies, but also on expectations about offsetting measures in the future. This paper analyzes the effects of an increase in government spending under a plausible debt-stabilizing policy that links current stimulus to...

In this paper we consider a new explanation for the often encountered observation that private consumption is excessively sensitive to anticipated government expenditures. We show that this excess sensitivity arises if consumers are aware of the government’s intertemporal budget constraint,...

Empirical studies typically find that private consumption is much more sensitive to changes in current disposable income than is predicted by Hall's (JPE, 1978) permanent income hypothesis. Standard explanations for this "excess sensitivity" of private consumption refer to liquidity constraints...

As is generally acknowledged, the failure of the perfect credit markets assumption underlying the permanent income hypothesis may be responsible for low consumption smoothing and observed excess sensitivity of consumption to current income. The economic literature puts forward a number of...

In earlier work we documented two episodes in which a sharp fiscal consolidation was associated with a surprisingly large expansion in private domestic demand. In this paper we draw on further evidence to investigate if and when fiscal policy changes can have such non-Keynesian effects. In the...

This paper assesses the transmission of fiscal policy shocks in a New Keynesian framework where government expenditures contribute to aggregate production. It is shown that even if the impact of government expenditures on production is small, this assumption helps to reconcile the models'...

While the underlying methodologies continue to be widely debated and refined, there is little consensus on how to assess the equilibrium exchange rate of economies dominated by production of finite natural resources such as the oil economies of the Middle East. In part this is due to the...

This paper empirically studies the effects of fiscal policy shocks on private consumption. Further, it tries to determine if the level of government bond yield and the unemployment rate affect that relationship. We use yearly data between 1970 and 2000 for thirty-eight countries, of which half...