The Effectiveness of Fiscal Policy in Stimulating Economic Activity : A Review of the Literature

Author/Editor:

Selma Mahfouz ; Richard Hemming ; Michael Kell

Publication Date:

December 1, 2002

Electronic Access:

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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:

This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.

Series:

Working Paper No. 02/208

Subject:

English

Publication Date:

December 1, 2002

ISBN/ISSN:

9781451874716/1018-5941

Stock No:

WPIEA2082002

Format:

Paper

Pages:

52

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