Fiscal Multipliers and the State of the Economy

 
Author/Editor: Baum, Anja ; Poplawski-Ribeiro, Marcos ; Weber, Anke
 
Publication Date: December 05, 2012
 
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Summary: 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.
 
Series: Working Paper No. 12/286
Subject(s): Fiscal policy | Production growth | Business cycles | Group of seven | Cross country analysis

 
English
Publication Date: December 05, 2012
ISBN/ISSN: 9781475565829/2227-8885 Format: Paper
Stock No: WPIEA2012286 Pages: 31
Price:
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