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Fiscal Shocks and The Sectoral Composition of Output

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  • Agustín Bénétrix

    ()

  • Philip Lane

    ()

Abstract

We study the impact of shocks to different types of government spending on the composition of sectoral output for a panel of EMU member countries. We find that fiscal shocks lead to an increase in the relative size of the nontraded sector. There is typically no significant impact on the level of production in the tradables sector but the level of imports increases and the level of exports declines in most cases. Overall, the results show that fiscal shocks matter not only for aggregate variables but also for the sectoral composition of output.

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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 21 (2010)
Issue (Month): 3 (July)
Pages: 335-350

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Handle: RePEc:kap:openec:v:21:y:2010:i:3:p:335-350

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: Government spending shocks; Tradables; Nontradables; European Monetary Union; Panel VAR; E24; E62;

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Citations

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Cited by:
  1. Olivier Cardi & Romain Restout, 2011. "Fiscal shocks in a two sector open economy," Working Papers hal-00567855, HAL.
  2. Agustín S. Bénétrix and Philip R. Lane, 2009. "The Impact of Fiscal Shocks on the Irish Economy," The Institute for International Integration Studies Discussion Paper Series iiisdp281, IIIS.
  3. Olivier Cardi & Romain Restout, 2012. "Unanticipated vs. Anticipated Tax Reforms in a Two-Sector Open Economy," Working Papers of BETA 2012-01, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  4. Philip Lane, 2010. "Some Lessons for Fiscal Policy from the Financial Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp334, IIIS.
  5. Amy K. Filipek & Till Schreiber, 2010. "The Stability and Growth Pact: Past Performance and Future Reforms," Working Papers 97, Department of Economics, College of William and Mary.
  6. Athanasios O. Tagkalakis, 2013. "Discretionary fiscal policy and economic activity in Greece," Working Papers 169, Bank of Greece.
  7. Steinar Holden & Victoria Sparrman, 2011. "Do Government Purchases Affect Unemployment?," CESifo Working Paper Series 3482, CESifo Group Munich.
  8. Philip Lane, 2010. "External Imbalances and Fiscal Policy," The Institute for International Integration Studies Discussion Paper Series iiisdp314, IIIS.

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