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Demand-side stabilization policies: What is the evidence of their potential?

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  • Kandil, Magda

Abstract

Using disaggregated data for the United States, this paper explores the effects of the variability of fiscal and monetary policy shocks. Higher variability of government spending shocks around a steady-state growth trend results in, on average, a decline in aggregate demand growth and inflation, with limited effects on output growth. On the other hand, higher variability of monetary shocks results in, on average, an increase in inflation and a decline in output growth. These results indicate the desirability of avoiding large fluctuations over time in either government spending or the money supply.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economics and Business.

Volume (Year): 61 (2009)
Issue (Month): 3 ()
Pages: 261-276

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Handle: RePEc:eee:jebusi:v:61:y:2009:i:3:p:261-276

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Web page: http://www.elsevier.com/locate/jeconbus

Related research

Keywords: Stabilization policies Asymmetry Growth and inflation bias;

References

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Citations

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Cited by:
  1. Magda E. Kandil & Hanan Morsy, 2010. "Fiscal Stimulus and Credibility in Emerging Countries," IMF Working Papers 10/123, International Monetary Fund.
  2. Magda Kandil, 2011. "Financial flows to developing and advanced countries: determinants and implications," International Journal of Development Issues, Emerald Group Publishing, vol. 10(1), pages 60-91, April.

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