An Exploration of the Private Sector Response to Changes in Government Saving Across OECD Countries
May 1, 2001
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Summary
Several recent papers have examined the response of national saving to changes in fiscal policy. This paper uses knowledge about the intergenerational fiscal position of a country to determine whether this information helps to explain cross country differences in the nature of the response. Using OECD data the paper finds that in countries in intergenerational fiscal balance, the private sector completely offsets fiscal policy changes whereas in other countries the private sector offset is only partial. Moreover, in countries with large intergenerational fiscal imbalances, strong fiscal consolidation packages reduce the impact of changes in fiscal policy on national saving.
Subject: Expenditure, Fiscal consolidation, Fiscal policy, Fiscal stance, National accounts, Private savings
Keywords: Europe, expenditure coefficient, Fiscal consolidation, fiscal policy, Fiscal stance, government saving, intergenerational fiscal balance, national saving, Private savings, Ricardian effects, saving position, saving rate, WP
Pages:
26
Volume:
2001
DOI:
Issue:
069
Series:
Working Paper No. 2001/069
Stock No:
WPIEA0692001
ISBN:
9781451849066
ISSN:
1018-5941
