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Effects of Fiscal Stimulus in Structural Models

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Author Info

  • Michael Kumhof
  • Dirk Muir
  • Carlos de Resende
  • Jan in ‘t Veld
  • René Lalonde
  • Davide Furceri
  • Annabelle Mourougane
  • John Roberts
  • Stephen Snudden
  • Mathias Trabandt
  • Günter Coenen
  • Susanna Mursula
  • Christopher J. Erceg
  • Charles Freedman
  • Jesper Lindé
  • Werner Roeger
  • Douglas Laxton

Abstract

The paper assesses, using seven structural models used heavily by policymaking institutions, the effectiveness of temporary fiscal stimulus. Models can, more easily than empirical studies, account for differences between fiscal instruments, for differences between structural characteristics of the economy, and for monetary-fiscal policy interactions. Findings are: (i) There is substantial agreement across models on the sizes of fiscal multipliers. (ii) The sizes of spending and targeted transfers multipliers are large. (iii) Fiscal policy is most effective if it has some persistence and if monetary policy accommodates it. (iv) The perception of permanent fiscal stimulus leads to significantly lower initial multipliers.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/73.

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Length: 121
Date of creation: 01 Mar 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/73

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Related research

Keywords: Budget deficits; Economic forecasting; Economic models; Government expenditures; Public debt; Stabilization measures; Taxes;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. A review of the recent literature on fiscal multipliers: size matters!
    by laurence-df in OFCE le blog on 2012-11-21 07:03:54
  2. Une revue récente de la littérature sur les multiplicateurs budgétaires : la taille compte !
    by laurence-df in OFCE le blog on 2012-11-21 07:02:59
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