The impact of fiscal consolidation on economic growth. An illustration for the Spanish economy based on a general equilibrium model
AbstractThis study illustrates the effects of different fiscal consolidation measures on economic activity through simulations performed with a general equilibrium model calibrated to the Spanish economy. Overall, our results show that fiscal consolidation has short-run costs but sizable long-run benefits in terms of growth. Regarding the short-run costs, their magnitude depends crucially on the presence of confidence effects due to the consolidation process, which tend to reduce the value of fiscal multipliers
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Bibliographic InfoPaper provided by Banco de Espa�a in its series Banco de Espa�a Occasional Papers with number 1205.
Length: 27 pages
Date of creation: May 2012
Date of revision:
Fiscal consolidation; general equilibrium; fiscal multipliers; confidence effects;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-CMP-2012-06-05 (Computational Economics)
- NEP-DGE-2012-06-05 (Dynamic General Equilibrium)
- NEP-EEC-2012-06-05 (European Economics)
- NEP-MAC-2012-06-05 (Macroeconomics)
- NEP-PBE-2012-06-05 (Public Economics)
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