Fiscal Policy and Economic Activity During Recessions in Advanced Economies

ByAxel Schimmelpfennig, Selma Mahfouz, Richard Hemming

May 1, 2002

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

Using data for advanced economies, this paper investigates whether factors identified in the theoretical and empirical literature explain the effectiveness of fiscal policy in responding to recessions. The results are informative about the fiscal response to recessions but provide only a partial explanation of the impact of fiscal policy on economic activity. Overall, it would appear that fiscal multipliers are very small.

Subject: Automatic stabilizers, Fiscal multipliers, Fiscal policy, Fiscal stance, Fiscal stimulus, Government debt management

Keywords: Automatic stabilizers, contraction, depth of recession, economic activity, Europe, fiscal multipliers, fiscal policy implementation, fiscal policy response, fiscal response, Fiscal stance, Fiscal stimulus, Global, recession, recession episode, recession equation, recession observation, Recessions, WP

Pages:
24
Volume:
2002
DOI:
https://doi.org/10.5089/9781451851038.001
Issue:
087
Series:
Working Paper No. 2002/087
Stock No:
WPIEA0872002
ISBN:
9781451851038
ISSN:
1018-5941

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