Expansionary Fiscal Contractions? Evidence from Panel Data
AbstractWe examine the ability of the expansionary fiscal contraction (EFC) hypothesis to explain the performance of OECD economies during fiscal crises. We find some limited evidence in its favour: if public consumption is reduced in response to a fiscal crisis (as defined by a high level of debt), private consumption does seem to increase. However, the size of the effect is smaller than that typically found in other studies. Furthermore, the increase in private consumption is usually not sufficient to offset the direct effect of a reduction in public consumption on output-fiscal contractions are not literally expansionary. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.
Volume (Year): 106 (2004)
Issue (Month): 4 (December)
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
Other versions of this item:
- Vincent Hogan, 2003. "Expansionary Fiscal Contractions? Evidence from Panel Data," Working Papers 200303, School Of Economics, University College Dublin.
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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