Fiscal Multipliers And The State Of The Economy
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Fiscal Multipliers And The State Of The Economy
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Author : Ms.Anja Baum
language : en
Publisher: International Monetary Fund
Release Date : 2012-12-05
Fiscal Multipliers And The State Of The Economy written by Ms.Anja Baum and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-05 with Business & Economics categories.
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.
Fiscal Policy Multipliers In Small States
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Author : Ali Alichi
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-26
Fiscal Policy Multipliers In Small States written by Ali Alichi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-26 with Business & Economics categories.
Government debt in many small states has risen beyond sustainable levels and some governments are considering fiscal consolidation. This paper estimates fiscal policy multipliers for small states using two distinct models: an empirical forecast error model with data from 23 small states across the world; and a Dynamic Stochastic General Equilibrium (DSGE) model calibrated to a hypothetical small state’s economy. The results suggest that fiscal policy using government current primary spending is ineffective, but using government investment is very potent in small states in affecting the level of their GDP over the medium term. These results are robust to different model specifications and characteristics of small states. Inability to affect GDP using current primary spending could be frustrating for policymakers when an expansionary policy is needed, but encouraging at the current juncture when many governments are considering fiscal consolidation. For the short term, however, multipliers for government current primary spending are larger and affected by imports as share of GDP, level of government debt, and position of the economy in the business cycle, among other factors.
Growth Forecast Errors And Fiscal Multipliers
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Author : Mr.Olivier J. Blanchard
language : en
Publisher: International Monetary Fund
Release Date : 2013-01-03
Growth Forecast Errors And Fiscal Multipliers written by Mr.Olivier J. Blanchard and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-01-03 with Business & Economics categories.
This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may reflect in part learning by forecasters and in part smaller multipliers than in the early years of the crisis.
Fiscal Multipliers
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Author : Nicoletta Batini
language : en
Publisher: International Monetary Fund
Release Date : 2014-10-02
Fiscal Multipliers written by Nicoletta Batini and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-10-02 with Business & Economics categories.
Fiscal multipliers are important tools for macroeconomic projections and policy design. In many countries, little is known about the size of multipliers, as data availability limits the scope for empirical research. This note provides general guidance on the definition, measurement, and use of fiscal multipliers. It reviews the literature related to their size, persistence and determinants. For countries where no reliable estimate is available, the note proposes a simple method to come up with reasonable values. Finally, the note presents options to incorporate multipliers in macroeconomic forecasts.
Medium Term Fiscal Multipliers During Protracted Recessions
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Author : Mr.Salvatore Dell'Erba
language : en
Publisher: International Monetary Fund
Release Date : 2014-12-05
Medium Term Fiscal Multipliers During Protracted Recessions written by Mr.Salvatore Dell'Erba and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-05 with Business & Economics categories.
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.
The Euro Area Government Spending Multiplier At The Effective Lower Bound
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Author : Adalgiso Amendola
language : en
Publisher: International Monetary Fund
Release Date : 2019-06-28
The Euro Area Government Spending Multiplier At The Effective Lower Bound written by Adalgiso Amendola and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-06-28 with Business & Economics categories.
We build a factor-augmented interacted panel vector-autoregressive model of the Euro Area (EA) and estimate it with Bayesian methods to compute government spending multipliers. The multipliers are contingent on the overall monetary policy stance, captured by a shadow monetary policy rate. In the short run (one year), whether the fiscal shock occurs when the economy is at the effective lower bound (ELB) or in normal times does not seem to matter for the size of the multiplier. However, as the time horizon increases, multipliers diverge across the two regimes. In the medium run (three years), the average multiplier is about 1 in normal times and between 1.6 and 2.8 at the ELB, depending on the specification. The difference between the two multipliers is distributed largely away from zero. More generally, the multiplier is inversely correlated with the level of the shadow monetary policy rate. In addition, we verify that EA data lend support to the view that the multiplier is larger in periods of economic slack, and we show that the shadow rate and the state of the business cycle are autonomously correlated with its size. The econometric approach deals with several technical problems highlighted in the empirical macroeconomic literature, including the issues of fiscal foresight and limited information.
The Economic Effects Of Fiscal Consolidation With Debt Feedback
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Author : Mr.Marcello M. Estevão
language : en
Publisher: International Monetary Fund
Release Date : 2013-05-31
The Economic Effects Of Fiscal Consolidation With Debt Feedback written by Mr.Marcello M. Estevão and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-05-31 with Business & Economics categories.
The past several years of recession and slow recovery have raised much interest on the effect of fiscal stimulus on economic activity, even as high public debts in many countries would call for fiscal consolidation. To evaluate the delicate balance between stimulus and consolidation requires measuring the size of fiscal multipliers, which often depends on having quarterly data so that exogenous fiscal policy shocks can be identified. We estimate fiscal multipliers using a novel methodology for identifying fiscal shocks within a structural vector autoregressive approach using annual data while controling for debt feedback effects. The estimation focuses on regions with scarce quarterly data (mostly low-income countries), and uses results for advanced economies, emerging market countries, and other broad groupings for which alternative estimates are available to validate the methodology. Differently from advanced and emerging market economies, fiscal consolidation in low-income countries has only a small temporary negative effect on growth while raising medium-term output. Shifting the composition of public spending toward capital expenditure further supports long-run growth.
How Big Small Are Fiscal Multipliers
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Author : Ethan Ilzetzki
language : en
Publisher: International Monetary Fund
Release Date : 2011-03-01
How Big Small Are Fiscal Multipliers written by Ethan Ilzetzki and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-03-01 with Business & Economics categories.
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.
Non Linearities And Fiscal Policy
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Author : Alexandra Fotiou
language : en
Publisher:
Release Date : 2019
Non Linearities And Fiscal Policy written by Alexandra Fotiou and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Fiscal Limits External Debt And Fiscal Policy In Developing Countries
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Author : Huixin Bi
language : en
Publisher: International Monetary Fund
Release Date : 2014-03-31
Fiscal Limits External Debt And Fiscal Policy In Developing Countries written by Huixin Bi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-03-31 with Business & Economics categories.
This paper studies fiscal policy effects in developing countries with external debt and sovereign default risks. State-dependent distributions of fiscal limits are simulated based on macroeconomic uncertainty and fiscal policy specifications. The analysis shows that expected future revenue plays an important role in the low fiscal limits of developing countries, relative to those of developed countries. External debt carries additional risks since large devaluation of the real exchange rate can suddenly raise default probabilities. Consistent with majority views, fiscal consolidations are counterproductive in the short and medium runs. When an economy approaches its fiscal limits, government spending can be less expansionary than in a low-debt state. As more revenue is required to service debt in a high-debt state, higher tax rates raise the economic cost of increasing consumption, reducing the fiscal multiplier.