Net Fiscal Stimulus During The Great Recession
AbstractThis paper studies the patterns of fiscal stimuli in the OECD countries propagated by the global crisis.Overall, we find that the USA net fiscal stimulus was modest relative to peers, despite it being theepicenter of the crisis, and having access to relatively cheap funding of its twin deficits. The USAis ranked at the bottom third in terms of the rate of expansion of the consolidated government consumptionand investment of the 28 countries in sample. Contrary to historical experience, emerging marketshad strongly countercyclical policy during the period immediately preceding the Great Recession andthe Great Recession. Many developed OECD countries had procyclical fiscal policy stance in the sameperiods. Federal unions, emerging markets and countries with very high GDP growth during the pre-recessionperiod saw larger net fiscal stimulus on average than their counterparts. We also find that greater netfiscal stimulus was associated with lower flow costs of general government debt in the same or subsequentperiod.
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Bibliographic InfoPaper provided by Department of Economics, UC Santa Cruz in its series Santa Cruz Department of Economics, Working Paper Series with number qt8df5z6j8.
Date of creation: 01 Feb 2011
Date of revision:
Social and Behavioral Sciences;
Other versions of this item:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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