Effects of Fiscal Stimulus in Structural Models

 
Author/Editor: Coenen, Günter ; Erceg, Christopher ; Freedman, Charles ; Furceri, Davide ; Kumhof, Michael ; Lalonde, René ; Laxton, Douglas ; Lindé, Jesper ; Mourougane, Annabelle ; Muir, Dirk ; Mursula, Susanna ; Roberts, John ; Roeger, Werner ; de Resende, Carlos ; Snudden, Stephen ; Trabandt, Mathias ; in ‘t Veld, Jan
 
Publication Date: March 01, 2010
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: The paper assesses, using seven structural models used heavily by policymaking institutions, the effectiveness of temporary fiscal stimulus. Models can, more easily than empirical studies, account for differences between fiscal instruments, for differences between structural characteristics of the economy, and for monetary-fiscal policy interactions. Findings are: (i) There is substantial agreement across models on the sizes of fiscal multipliers. (ii) The sizes of spending and targeted transfers multipliers are large. (iii) Fiscal policy is most effective if it has some persistence and if monetary policy accommodates it. (iv) The perception of permanent fiscal stimulus leads to significantly lower initial multipliers.
 
Series: Working Paper No. 10/73
Subject(s): Budget deficits | Cross country analysis | Economic forecasting | Economic models | Europe | Fiscal policy | Government expenditures | Monetary policy | Public debt | Stabilization measures | Taxes | United States

Author's Keyword(s): Fiscal Policy | Fiscal Stimulus | Fiscal Multipliers | Government Deficits
 
English
Publication Date: March 01, 2010
Format: Paper
Stock No: WPIEA2010073 Pages: 121
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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