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Do Fiscal Spillovers Matter?

Author/Editor: Ivanova, Anna | Weber, Sebastian
Authorized for Distribution: September 1, 2011
Electronic Access: Free Full Text (PDF file size is 1,138KB)
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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 the impact of fiscal spillovers on growth in the context of a coordinated exit from crisis management policies. We find that despite potentially sizeable domestic effects from consolidation, aggregate negative spillovers to other countries are likely to be contained in 2011-2012 unless fiscal multipliers and/or imports elasticities are very large. Small and open European economies, however, will be substantially affected in any case. In contrast, the coordinated exit from fiscal stimulus will have limited direct effect on European peripheral countries since they are relatively closed, with the notable exception of Ireland.
 
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Series: Working Paper No. 11/211
Subject(s): Economic growth | Economic models | Fiscal consolidation | Fiscal policy | Spillovers
Author's keyword(s): fiscal policy | spillovers | coordinated fiscal exit
 
English  
    Published:   September 1, 2011        
            Format:   Paper
    Stock No:   WPIEA2011211   Pages:   43
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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