Growth Forecast Errors And Fiscal Multipliers
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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.
Growth Forecast Errors And Fiscal Multipliers
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Author : Olivier Blanchard
language : en
Publisher:
Release Date : 2013
Growth Forecast Errors And Fiscal Multipliers written by Olivier Blanchard and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with 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.
Planned Fiscal Consolidations And Growth Forecast Errors New Panel Evidence On Fiscal Multipliers
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Author : Ansgar Belke
language : en
Publisher:
Release Date : 2015
Planned Fiscal Consolidations And Growth Forecast Errors New Panel Evidence On Fiscal Multipliers written by Ansgar Belke and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Getting Into The Nitty Gritty Of Fiscal Multipliers Small Details Big Impacts
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Author : José Federico Geli
language : en
Publisher: International Monetary Fund
Release Date : 2023-02-10
Getting Into The Nitty Gritty Of Fiscal Multipliers Small Details Big Impacts written by José Federico Geli 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 2023-02-10 with Business & Economics categories.
Despite the remarkable progress the literature has made throughout the past years in studying fiscal multipliers, estimates still vary considerably across studies. Partly, estimates differ because of context-specific variables that affect multipliers, but also because of the lack of a standardized framework to calculate and report them, making comparisons among studies hard to make. In this paper, we use a large panel of countries to study how some important methodological details affect the empirical estimates. Focusing on emerging economies, we show how slight changes in the filtering approach of fiscal forecast errors or the accumulation procedure of responses can significantly impact estimates. We emphasize that one of the most important features of estimating multipliers is the endogenous dynamic responses of fiscal variables to fiscal shocks, and therefore we argue against reporting multipliers as simply the output response to exogenous fiscal innovations. Although our baseline results are in line with the previous studies, our standardized framework allow us to make fairer comparisons of multiplier estimates across budgetary items and country income groups.
Assessing The Impact And Phasing Of Multi Year Fiscal Adjustment
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Author : Ran Bi
language : en
Publisher: International Monetary Fund
Release Date : 2013-08-23
Assessing The Impact And Phasing Of Multi Year Fiscal Adjustment written by Ran 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 2013-08-23 with Business & Economics categories.
This paper provides a general framework to assess the output and debt dynamics of an economy undertaking multi-year fiscal adjustment. The framework allows country-specific assumptions about the magnitude and persistence of fiscal multipliers, hysteresis effects, and endogenous financing costs. In addition to informing macro projections, the framework can also shed light on the appropriate phasing of fiscal consolidation—in particular, on whether it should be front- or back-loaded. The framework is applied to stylized advanced and emerging economy examples. It suggests that for a highly-indebted economy undertaking large multi-year fiscal consolidation, high multipliers do not always argue against frontloaded adjustment. The case for more gradual or back-loaded adjustment is strongest when hysteresis effects are in play, but it needs to be balanced against implications for debt sustainability. Application to actual country examples tends to cast doubt on claims that very large multipliers have been operating post-crisis. It seems that the GDP forecast errors for Greece may have been due more to over-optimism on potential growth estimates than to underestimating fiscal multipliers.
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.
Uncertainty And Public Investment Multipliers The Role Of Economic Confidence
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Author : William Gbohoui
language : en
Publisher: International Monetary Fund
Release Date : 2021-11-12
Uncertainty And Public Investment Multipliers The Role Of Economic Confidence written by William Gbohoui 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 2021-11-12 with Business & Economics categories.
This paper investigates how macroeconomic uncertainty affects the fiscal multiplier of public investment. In theory, uncertainty can reduce the multiplier if the private sector becomes more cautious and does not respond to the fiscal stimulus. Conversely, it can increase the fiscal multiplier if public investment shocks improve private agents’ expectations about future economic outlook, and lead to larger private spending. Using the disagreement about GDP forecasts as a proxy for uncertainty, we find that unexpected increases in public investment have larger and longer-lasting effects on output, investment, and employment during periods of high uncertainty, with multipliers above 2, and the larger multipliers are not driven by economic slack. Public investment shocks are also found to boost private sector confidence during heightened uncertainty, driving-up expectations about future economic development which in turn magnify private sector response to the initial stimulus.
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.
Macrofinancial Causes Of Optimism In Growth Forecasts
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Author : Mr. Yan Carriere-Swallow
language : en
Publisher: International Monetary Fund
Release Date : 2021-11-12
Macrofinancial Causes Of Optimism In Growth Forecasts written by Mr. Yan Carriere-Swallow 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 2021-11-12 with Business & Economics categories.
We analyze the causes of the apparent bias towards optimism in growth forecasts underpinning the design of IMF-supported programs, which has been documented in the literature. We find that financial variables observable to forecasters are strong predictors of growth forecast errors. The greater the expansion of the credit-to-GDP gap in the years preceding a program, the greater its over-optimism about growth over the next two years. This result is strongest among forecasts that were most optimistic, where errors are also increasing in the economy’s degree of liability dollarization. We find that the inefficient use of financial information applies to growth forecasts more broadly, including the IMF’s forecasts in the World Economic Outlook and those produced by professional forecasters compiled by Consensus Economics. We conclude that improved macrofinancial analysis represents a promising avenue for reducing over-optimism in growth forecasts.
Not Dancing Together
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Author : Vincent Belinga
language : en
Publisher: International Monetary Fund
Release Date : 2015-05-27
Not Dancing Together written by Vincent Belinga 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 2015-05-27 with Business & Economics categories.
This paper provides estimates of the government spending multiplier over the monetary policy cycle. We identify government spending shocks as forecast errors of the growth rate of government spending from the Survey of Professional Forecasters (SPF) and from the Greenbook record. The state of monetary policy is inferred from the deviation of the U.S. Fed funds rate from the target rate, using a smooth transition function. Applying the local projections method to quarterly U.S. data, we find that the federal government spending multiplier is substantially higher under accommodative than non-accommodative monetary policy. Our estimations also suggest that federal government spending may crowd-in or crowd-out private consumption, depending on the extent of monetary policy accommodation. The latter result reconciles—in a unified framework—apparently contradictory findings in the literature. We discuss the implications of our findings for the ongoing normalization of monetary conditions in advanced economies.