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Trade spill-overs of fiscal policy in the European Union: a panel analysis
[‘Fiscal policy, profits, and investment’]

Author

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  • Roel Beetsma
  • Massimo Giuliodori
  • Franc Klaassen

Abstract

We explore international spill-overs from fiscal policy shocks via trade in Europe. To assess and quantify the channels through which a fiscal expansion stimulates domestic activity, foreign exports, and foreign output, we estimate a dynamic empirical model of government spending, net taxes, and output, and combine its estimates with a panel model of trade linkages across European countries. The baseline estimates of both models are quite robust and statistically significant. Our results indicate that trade spill-overs of fiscal shocks should be taken into account when assessing the character and intensity of economic integration in the European Union.— Roel Beetsma, Massimo Giuliodori and Franc Klaassen

Suggested Citation

  • Roel Beetsma & Massimo Giuliodori & Franc Klaassen, 2006. "Trade spill-overs of fiscal policy in the European Union: a panel analysis [‘Fiscal policy, profits, and investment’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(48), pages 640-687.
    • Handle: RePEc:oup:ecpoli:v:21:y:2006:i:48:p:640-687.
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    File URL: http://hdl.handle.net/10.1111/j.1468-0327.2006.00168.x
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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