Trade openness and the effectiveness of fiscal policy: some empirical evidence
AbstractIs the potency of fiscal policy lower for more open economies, as suggested by economic theory? Using annual data from the period 1951–2007, for 62 developed and developing economies, the paper’s empirical findings show that the effectiveness of fiscal policy is indeed reduced by an economy’s trade openness, and that the effect is quantitatively substantial. In particular, the paper’s estimates suggest that an increase in trade openness by 10% of GDP reduces the magnitude of the long-run fiscal multiplier by 5–6%. Copyright Springer-Verlag 2012
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal International Review of Economics.
Volume (Year): 59 (2012)
Issue (Month): 3 (September)
Contact details of provider:
Web page: http://www.springer.com/economics/journal/12232
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.