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Fiscal Policy and Economic Activity During Recessions in Advanced Economies

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  • Axel Schimmelpfennig
  • Selma Mahfouz
  • Richard Hemming
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    Abstract

    Using data for advanced economies, this paper investigates whether factors identified in the theoretical and empirical literature explain the effectiveness of fiscal policy in responding to recessions. The results are informative about the fiscal response to recessions but provide only a partial explanation of the impact of fiscal policy on economic activity. Overall, it would appear that fiscal multipliers are very small.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/87.

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    Length: 24
    Date of creation: 01 May 2002
    Date of revision:
    Handle: RePEc:imf:imfwpa:02/87

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    References

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    1. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    2. Fatas, Antonio & Mihov, Ilian, 2001. "Government size and automatic stabilizers: international and intranational evidence," Journal of International Economics, Elsevier, Elsevier, vol. 55(1), pages 3-28, October.
    3. Giavazzi, Francesco & Pagano, Marco, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 417, C.E.P.R. Discussion Papers.
    4. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 12(1), pages 1-31, 03.
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    Cited by:
    1. Cimadomo, Jacopo & Hauptmeier, Sebastian & Sola, Sergio, 2011. "Identifying the effects of government spending shocks with and without expected reversal: an approach based on U.S. real-time data," Working Paper Series, European Central Bank 1361, European Central Bank.
    2. Jérôme Creel & Bruno Ducoudré & Catherine Mathieu & Henri Sterdyniak, 2005. "Doit-on oublier la politique budgétaire ?. Une analyse critique de la nouvelle théorie anti-keynésienne des finances publiques," Revue de l'OFCE, Presses de Sciences-Po, Presses de Sciences-Po, vol. 92(1), pages 43-97.
    3. Zhiwei Zhang & Wenlang Zhang, 2009. "The Road to Recovery: Fiscal Stimulus, Financial Sector Rehabilitation, and Exit from Policy Easing," Working Papers 0918, Hong Kong Monetary Authority.
    4. Borys, Paweł & Ciżkowicz, Piotr & Rzońca, Andrzej, 2011. "Panel data evidence on non-Keynesian efects of fiscal policy in the EU New Member," MPRA Paper 32696, University Library of Munich, Germany.
    5. Kurt Kratena & Markus Marterbauer & Serguei Kaniovski, 2003. "Auswirkungen öffentlicher Konjunkturimpulse auf Wachstum und Beschäftigung," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 29(4), pages 503-530.
    6. Canale, Rosaria Rita & Napolitano, Oreste, 2009. "The recessive attitude of EMU policies: reflections on the italian experience, 1998–2008," MPRA Paper 20207, University Library of Munich, Germany.
    7. Carine Bouthevillain & John Caruana & Cristina Checherita & Jorge Cunha & Esther Gordo & Stephan Haroutunian & Amela Hubic & Geert Langenus & Bernhard Manzke & Javier J. Pérez & Pietro Tommasino, 2009. "Pros and Cons of various fiscal measures to stimulate the economy," BCL working papers, Central Bank of Luxembourg 40, Central Bank of Luxembourg.
    8. Zhang, Zhiwei & Zhang, Wenlang, 2011. "The road to recovery: Fiscal stimulus, financial sector rehabilitation, and potential risks ahead," Journal of Asian Economics, Elsevier, Elsevier, vol. 22(4), pages 311-321, August.
    9. Renee Philip & John Janssen, 2002. "Indicators of Fiscal Impulse for New Zealand," Treasury Working Paper Series 02/30, New Zealand Treasury.
    10. Maria Gabriella Briotti, 2005. "Economic reactions to public finance consolidation - a survey of the literature," Occasional Paper Series 38, European Central Bank.
    11. repec:spo:wpecon:info:hdl:2441/1769 is not listed on IDEAS

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