Uncertain Fiscal Consolidations
AbstractThe paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition are uncertain. Drawing on the evidence in Alesina and Ardagna (2010), we emphasize whether or not the fiscal consolidation is driven by tax rises or expenditure cuts. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary and/or successful in stabilizing government debt.
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Bibliographic InfoPaper provided by Scottish Institute for Research in Economics (SIRE) in its series SIRE Discussion Papers with number 2012-09.
Date of creation: 2012
Date of revision:
government debt; budget reform; monetary-fiscal policy interactions;
Other versions of this item:
- Huixin Bi & Eric M. Leeper & Campbell Leith, 2012. "Uncertain Fiscal Consolidations," Working Papers 2012_03, Business School - Economics, University of Glasgow.
- Huixin Bi & Eric M. Leeper & Campbell Leith, 2013. "Uncertain Fiscal Consolidations," Working Papers 13-26, Bank of Canada.
- Huixin Bi & Eric M. Leeper & Campbell B. Leith, 2012. "Uncertain Fiscal Consolidations," NBER Working Papers 17844, National Bureau of Economic Research, Inc.
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-MAC-2012-06-25 (Macroeconomics)
- NEP-PBE-2012-06-25 (Public Economics)
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