How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Fiscal Stimulus to the Rescue? Short-Run Benefits and Potential Long-Run Costs of Fiscal Deficits

Author/Editor: Freedman, Charles | Kumhof, Michael | Laxton, Douglas | Muir, Dirk | Mursula, Susanna
Authorized for Distribution: November 1, 2009
Electronic Access: Free Full Text (PDF file size is 1,005KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
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: This paper uses the IMF's Global Integrated Monetary and Fiscal Model to compute shortrun multipliers of fiscal stimulus measures and long-run crowding-out effects of higher debt. Multipliers of two-year stimulus range from 0.2 to 2.2 depending on the fiscal instrument, the extent of monetary accommodation and the presence of a financial accelerator mechanism. A permanent 0.5 percentage point increase in the U.S. deficit to GDP ratio raises the U.S. tax burden and world real interest rates in the long run, thereby reducing U.S. and rest of the world output by 0.3-0.6 and 0.2 percent, respectively.
 
Order a print copy
Series: Working Paper No. 09/255
Subject(s): Budget deficits | Economic models | External shocks | Financial crisis | Financial sector | Fiscal policy | Global Financial Crisis 2008-2009 | Government expenditures | International financial system | Monetary policy | Productivity | Public debt
Author's keyword(s): Fiscal Stimulus; Crowding-Out; Financial Crisis; Non-Ricardian Households; Government Deficits; Government Debt; Macro-Financial Linkages
 
English  
    Published:   November 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009255   Pages:   40
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.