Do Fiscal Spillovers Matter?

Author/Editor:

Sebastian Weber ; Anna Ivanova

Publication Date:

September 1, 2011

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:

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.

Series:

Working Paper No. 11/211

Subject:

English

Publication Date:

September 1, 2011

ISBN/ISSN:

9781463902315/1018-5941

Stock No:

WPIEA2011211

Format:

Paper

Pages:

43

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