Uncertain Fiscal Consolidations
AbstractThe paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt, and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary or successful in stabilizing government debt. We argue that the conditions that could render fiscal consolidation efforts expansionary are unlikely to apply in the current economic environment.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): (2013)
Issue (Month): (02)
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Other versions of this item:
- Huixin Bi & Eric M. Leeper & Campbell Leith, 2013. "Uncertain Fiscal Consolidations," Working Papers 13-26, Bank of Canada.
- Huixin Bi & Eric M. Leeper & Campbell B. Leith, 2012. "Uncertain Fiscal Consolidations," NBER Working Papers 17844, National Bureau of Economic Research, Inc.
- Bi, Huixin & Leeper, Eric M. & Leith, Campbell, 2012. "Uncertain Fiscal Consolidations," SIRE Discussion Papers 2012-09, Scottish Institute for Research in Economics (SIRE).
- Huixin Bi & Eric M. Leeper & Campbell Leith, 2012. "Uncertain Fiscal Consolidations," Working Papers 2012_03, Business School - Economics, University of Glasgow.
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
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