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| Author | : Mr.Salvatore Dell'Erba |
| Publisher | : International Monetary Fund |
| Total Pages | : 42 |
| Release | : 2014-12-05 |
| Genre | : Business & Economics |
| ISBN | : 1475559194 |
Download Medium-Term Fiscal Multipliers during Protracted Recessions Book in PDF, ePub and Kindle
The paper examines the consequences of fiscal consolidation in times of persistently low growth and high unemployment by estimating medium-term fiscal multipliers during protracted recessions (PR) in a sample of 17 OECD countries. Based on Jorda’s (2005) local projection methodology, we find that cumulative fiscal multipliers related to output, employment and unemployment at five-year horizons are significantly above one during PR episodes. These results suggest that medium-term fiscal consolidation plans to reduce public debt burdens should proceed gradually if economic activity remains below trend for a prolonged period.
| Author | : Alberto Alesina |
| Publisher | : University of Chicago Press |
| Total Pages | : 596 |
| Release | : 2013-06-25 |
| Genre | : Business & Economics |
| ISBN | : 022601844X |
Download Fiscal Policy after the Financial Crisis Book in PDF, ePub and Kindle
The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth. Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty over the sustainability of recent economic policies, further contributions to this volume discuss the merits of alternate means of debt reduction through decreased government spending or increased taxes. A final section examines how the short-term political forces driving fiscal policy might be balanced with aspects of the long-term planning governing monetary policy. A direct intervention in timely debates, Fiscal Policy after the Financial Crisis offers invaluable insights about various responses to the recent financial crisis.
| Author | : Matthew B. Canzoneri |
| Publisher | : |
| Total Pages | : 39 |
| Release | : 2015 |
| Genre | : Government spending policy |
| ISBN | : |
Download Fiscal Multipliers in Recessions Book in PDF, ePub and Kindle
The Great Recession, and the fiscal response to it, has revived interest in the size of fiscal multipliers. Standard business cycle models have difficulties generating multipliers greater than one. And they also cannot produce any significant state-dependence in the size of the multipliers over the business cycle. In this paper we employ a variant of the Curdia-Woodford model of costly financial intermediation and show that fiscal multipliers can be strongly state dependent in a countercyclical manner. In particular, a fiscal expansion during a recession may lead to multiplier values exceeding two, while a similar expansion during an economic boom would produce multipliers falling short of unity. This pattern obtains if the spread (the financial friction) is more sensitive to fiscal policy during recessions than during expansions, a feature that is present in the data. Our results are consistent with recent empirical work documenting the state contingency of multipliers.
| Author | : Carlos Montes-Galdon |
| Publisher | : |
| Total Pages | : 34 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Are Fiscal Multipliers Larger During Recessions? Book in PDF, ePub and Kindle
This paper estimates how fiscal multipliers have changed over time using a time varying parameter model vector autorregressive model with stochastic volatility (TVPSV-VAR). First, I find that there is significant evidence that the multiplier has changed over time, once we control for changes in volatility, but that there is no empirical support to claim that the fiscal multiplier is bigger during a recession even if we consider different components of government spending. Second, I show that stochastic volatility plays an important role in the estimation of the model, and therefore, it should be taken into account when estimating VARs that include government spending or output. Finally, I show that government spending was extremely ineffective during the Great Recession of 2008, but taxes and transfer payments played an important role to stabilize the economy.
| Author | : Ethan Ilzetzki |
| Publisher | : International Monetary Fund |
| Total Pages | : 68 |
| Release | : 2011-03-01 |
| Genre | : Business & Economics |
| ISBN | : 1455218022 |
Download How Big (Small?) are Fiscal Multipliers? Book in PDF, ePub and Kindle
We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero.
| Author | : Daniel Riera-Crichton |
| Publisher | : |
| Total Pages | : 35 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
Download Fiscal Multipliers in Recessions and Expansions Book in PDF, ePub and Kindle
Using non-linear methods, this paper finds that existing estimates of government spending multipliers in expansion and recession may yield biased results by ignoring whether government spending is increasing or decreasing. For industrial countries, the problem originates in the fact that, contrary to one's priors, it is not always the case that government spending is going up in recessions (i.e., acting countercyclically). In almost as many cases, government spending is actually going down (i.e., acting procyclically). Since the economy does not respond symmetrically to government spending increases or decreases, the "true" long-run multiplier for bad times (and government spending going up) turns out to be 2.3 compared to 1.3 if we just distinguish between recession and expansion. In the case of developing countries, the bias results from the fact that the multiplier for recessions and government spending going down (the "when-it-rains-it-pours" phenomenon) is larger than when government spending is going up.
| Author | : Alan J. Auerbach |
| Publisher | : |
| Total Pages | : 35 |
| Release | : 2011 |
| Genre | : Government spending policy |
| ISBN | : |
Download Fiscal multipliers in recession and expansion Book in PDF, ePub and Kindle
In this paper, we estimate government purchase multipliers for a large number of OECD countries, allowing these multipliers to vary smoothly according to the state of the economy and using real-time forecast data to purge policy innovations of their predictable components. We adapt our previous methodology (Auerbach and Gorodnichenko, 2011) to use direct projections rather than the SVAR approach to estimate multipliers, to economize on degrees of freedom and to relax the assumptions on impulse response functions imposed by the SVAR method. Our findings confirm those of our earlier paper. In particular, GDP multipliers of government purchases are larger in recession, and controlling for real-time predictions of government purchases tends to increase the estimated multipliers of government purchases in recession. We also consider the responses of other key macroeconomic variables and find that these responses generally vary over the cycle as well, in a pattern consistent with the varying impact on GDP.
| Author | : Ms.Anja Baum |
| Publisher | : International Monetary Fund |
| Total Pages | : 31 |
| Release | : 2012-12-05 |
| Genre | : Business & Economics |
| ISBN | : 1475523920 |
Download Fiscal Multipliers and the State of the Economy Book in PDF, ePub and Kindle
Only a few empirical studies have analyzed the relationship between fiscal multipliers and the underlying state of the economy. This paper investigates this link on a country-by-country basis for the G7 economies (excluding Italy). Our results show that fiscal multipliers differ across countries, calling for a tailored use of fiscal policy. Moreover, the position in the business cycle affects the impact of fiscal policy on output: on average, government spending, and revenue multipliers tend to be larger in downturns than in expansions. This asymmetry has implications for the choice between an upfront fiscal adjustment versus a more gradual approach.
| Author | : Nicoletta Batini |
| Publisher | : International Monetary Fund |
| Total Pages | : 61 |
| Release | : 2012-07-01 |
| Genre | : Business & Economics |
| ISBN | : 1475505388 |
Download Successful Austerity in the United States, Europe and Japan Book in PDF, ePub and Kindle
The output effects of 2009 fiscal expansions have been hotly debated. But the discussion of fiscal multipliers is even more relevant now that several European countries have had to quickly retract their stimulus measures in an effort to regain market confidence. Using regime-switching VARs we estimate the impact of fiscal adjustment on the United States, Europe and Japan allowing for fiscal multipliers to vary across recessions and booms. We also estimate ex ante probabilities of recessions derived in association with different-sized and different types of consolidation shocks (expenditure- versus tax-based). We use these estimates to understand how consolidations should be designed to be most effective in terms of permanently and rapidly reducing a country’s debt-to-GDP ratio. The main finding is that smooth and gradual consolidations are to be preferred to frontloaded or aggressive consolidations, especially for economies in recession facing high risk premia on public debt, because sheltering growth is key to the success of fiscal consolidation in these cases.
| Author | : Alan J. Auerbach |
| Publisher | : |
| Total Pages | : 40 |
| Release | : 2021 |
| Genre | : COVID-19 (Disease) |
| ISBN | : |
Download Fiscal Multipliers in the COVID19 Recession Book in PDF, ePub and Kindle
In response to the record-breaking COVID19 recession, many governments have adopted unprecedented fiscal stimuli. While countercyclical fiscal policy is effective in fighting conventional recessions, little is known about the effectiveness of fiscal policy in the current environment with widespread shelter-in-place ("lockdown") policies and the associated considerable limits on economic activity. Using detailed regional variation in economic conditions, lockdown policies, and U.S. government spending, we document that the effects of government spending were stronger during the peak of the pandemic recession, but only in cities that were not subject to strong stay-at-home orders. We examine mechanisms that can account for our evidence and place our findings in the context of other recent evidence from microdata.
