Advanced Search
MyIDEAS: Login to save this paper or follow this series

On Keynesian effects of (apparent) non-Keynesian fiscal policies

Contents:

Author Info

  • Canale, Rosaria Rita
  • Foresti, Pasquale
  • Marani, Ugo
  • Napolitano, Oreste

Abstract

The aim of this paper is to evaluate the robustness of the theory that claims restrictive effects of expansionary fiscal policy. It shows that such so-called “non-Keynesian effects” may arise from synchronous and opposite monetary policy interventions. The paper demonstrates this conclusion through a stylized model – supported by an empirical investigation on ECB and FED reaction functions – in which Central Banks consider deficit spending as an element that generates inflation expectations. Econometric analysis also shows that the ECB reacts asymmetrically to deficit spending variations while the FED has a linear reaction to this indicator.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/3742/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3742.

as in new window
Length:
Date of creation: 30 Jun 2007
Date of revision: Jun 2007
Handle: RePEc:pra:mprapa:3742

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Fiscal policy; Monetary policy; Central Banks Policy strategies;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Stéphane Capet, 2004. "The Efficiency of Fiscal Policies: a Survey of the Literature," Working Papers 2004-11, CEPII research center.
  2. Stephan Sauer & Jan-Egbert Sturm, 2003. "Using Taylor Rules to Understand ECB Monetary Policy," CESifo Working Paper Series 1110, CESifo Group Munich.
  3. Alberto Alesina & Roberto Perotti, 1997. "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects," IMF Staff Papers, Palgrave Macmillan, vol. 44(2), pages 210-248, June.
  4. Francesco Giavazzi & Tullio Jappelli & Marco Pagano, 1999. "Searching for Non-Keynesian Effects of Fiscal Policy," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 16, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  5. Philip Arestis & Malcolm Sawyer, 2003. "Reinventing Fiscal Policy," General Economics and Teaching, EconWPA 0306004, EconWPA.
  6. Carlberg, Michael, 2004. "Monetary and Fiscal Policy Interactions in the Euro Area," Center for European, Governance and Economic Development Research Discussion Papers 23, University of Goettingen, Department of Economics.
  7. Willi Semmler & Wenlang Zhang, 2004. "Monetary and Fiscal Policy Interactions in the Euro Area," Economic Change and Restructuring, Springer, Springer, vol. 31(2), pages 205-227, June.
  8. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of two Small Euopean Countries," Working Papers 89, Dipartimento Scienze Economiche, Universita' di Bologna.
  9. Andrew Mountford & Harald Uhlig, 2005. "What are the Effects of Fiscal Policy Shocks?," SFB 649 Discussion Papers SFB649DP2005-039, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  10. Giavazzi, Francesco & Jappelli, Tullio & Pagano, Marco, 2000. "Searching for Non-Linear Effects of Fiscal Policy: Evidence from Industrial and Developing Countries," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2374, C.E.P.R. Discussion Papers.
  11. Francesco Giavazzi & Tullio Jappelli & Marco Pagano & Marina Benedetti, 2005. "Searching for Non-Monotonic Effects of Fiscal Policy: New Evidence," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 142, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  12. Roeger, Werner & in 't Veld, Jan, 2004. "Some selected simulation experiments with the European commission's QUEST model," Economic Modelling, Elsevier, Elsevier, vol. 21(5), pages 785-832, September.
  13. David Cobham, 2006. " Using Taylor Rules to Assess the Relative Activism of the European Central Bank, the Bank of England and the Federal Reserve Board," CDMA Conference Paper Series, Centre for Dynamic Macroeconomic Analysis 0602, Centre for Dynamic Macroeconomic Analysis.
  14. Allsop, Christopher & Vines, David, 2000. "The Assessment: Macroeconomic Policy," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 16(4), pages 1-32, Winter.
  15. repec:fth:coluec:754 is not listed on IDEAS
  16. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  17. Kenneth F. Wallis, 2004. "Comparing Empirical Models of the Euro Economy," Econometric Society 2004 Australasian Meetings, Econometric Society 14, Econometric Society.
  18. Alan G. Isaac, 2009. "Monetary And Fiscal Interactions: Short-Run And Long-Run Implications," Metroeconomica, Wiley Blackwell, Wiley Blackwell, vol. 60(1), pages 197-223, 02.
  19. Robert L. Hetzel, 2000. "The Taylor rule : is it a useful guide to understanding monetary policy?," Economic Quarterly, Federal Reserve Bank of Richmond, Federal Reserve Bank of Richmond, issue Spr, pages 1-33.
  20. David Romer, 2000. "Keynesian Macroeconomics without the LM Curve," NBER Working Papers 7461, National Bureau of Economic Research, Inc.
  21. Rudiger Ahrend & Pietro Catte & Robert W.R. Price, 2006. "Interactions Between Monetary and Fiscal Policy: How Monetary Conditions Affect Fiscal Consolidation," OECD Economics Department Working Papers 521, OECD Publishing.
  22. Adam, Klaus & Billi, Roberto M, 2006. "Monetary Conservatism and Fiscal Policy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5740, C.E.P.R. Discussion Papers.
  23. Doris Prammer, 2004. "Expansionary Fiscal Consolidations? An Appraisal of the Literature on Non-Keynesian Effects of Fiscal Policy and a Case Study for Austria," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 34–52.
  24. Ramey, Valerie A. & Shapiro, Matthew D., 1998. "Costly capital reallocation and the effects of government spending," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 48(1), pages 145-194, June.
  25. Dario Caldara & Christophe Kamps, 2006. "What Do We Know About the Effects of Fiscal Policy Shocks? A Comparative Analysis," Computing in Economics and Finance 2006, Society for Computational Economics 257, Society for Computational Economics.
  26. Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 21(46), pages 207-261, 04.
  27. Alberto Alesina & Roberto Perotti, 1995. "Fiscal Expansions and Fiscal Adjustments in OECD Countries," NBER Working Papers 5214, National Bureau of Economic Research, Inc.
  28. Paul Krugman, 2005. "Is Fiscal Policy Poised for a Comeback?," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 21(4), pages 515-523, Winter.
  29. Paolo Surico, 2003. "Asymmetric Reaction Functions for the Euro Area," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 19(1), pages 44-57.
  30. Perotti, Roberto, 2002. "Estimating the effects of fiscal policy in OECD countries," Working Paper Series, European Central Bank 0168, European Central Bank.
  31. Carlberg, Michael, 2004. "Monetary and Fiscal Policy Interactions in the Euro Area," Working Paper, Helmut Schmidt University, Hamburg 28/2004, Helmut Schmidt University, Hamburg.
  32. Thomas Dalsgaard & Christophe André & Pete Richardson, 2001. "Standard Shocks in the OECD Interlink Model," OECD Economics Department Working Papers 306, OECD Publishing.
  33. Douglas Laxton & Ben Hunt, 2003. "Some Simulation Properties of the Major Euro Area Economies in Multimod," IMF Working Papers 03/31, International Monetary Fund.
  34. Warwick J. McKibbin, 2002. "Macroeconomic Policy in Japan," Asian Economic Papers, MIT Press, MIT Press, vol. 1(2), pages 133-165.
  35. Ardagna, Silvia, 2004. "Financial markets' behavior around episodes of large changes in the fiscal stance," Working Paper Series, European Central Bank 0390, European Central Bank.
  36. Jean-Paul Fitoussi, 2004. "Reform of the stability and growth pact," Sciences Po publications info:hdl:2441/4561, Sciences Po.
  37. Selma Mahfouz & Richard Hemming & Michael Kell, 2002. "The Effectiveness of Fiscal Policy in Stimulating Economic Activity," IMF Working Papers 02/208, International Monetary Fund.
  38. Hjelm, Goran, 2002. "Is private consumption growth higher (lower) during periods of fiscal contractions (expansions)?," Journal of Macroeconomics, Elsevier, Elsevier, vol. 24(1), pages 17-39, March.
  39. Roberto Perotti, 2002. "Estimating the effects of fiscal policy in OECD countries," Economics Working Papers, European Network of Economic Policy Research Institutes 015, European Network of Economic Policy Research Institutes.
  40. n/a, 1997. "A Common Currency Route to EMU: The Hard ECU Revisited," NIESR Discussion Papers, National Institute of Economic and Social Research 218, National Institute of Economic and Social Research.
  41. Christopher Allsopp & David Vines, 2005. "The Macroeconomic Role of Fiscal Policy," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 21(4), pages 485-508, Winter.
  42. Kenneth N. Kuttner & Adam S. Posen, 2002. "Passive Savers and Fiscal Policy Effectiveness in Japan," Working Paper Series, Peterson Institute for International Economics WP02-2, Peterson Institute for International Economics.
  43. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 53-78, July.
  44. Philippine Cour & Eric Dubois & Selma Mahfouz & Jean Pisani-Ferry, 1996. "The Cost of Fiscal Retrenchment Revisited: how Strong is the Evidence?," Working Papers 1996-16, CEPII research center.
  45. Matthew B. Canzoneri & Robert E. Cumby & Behzad T. Diba, 2002. "Should the European Central Bank and the Federal Reserve be concerned about fiscal policy?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 333-389.
  46. Christopher Allsopp, 2002. "The Future of Macroeconomic Policy in the European Union," Discussion Papers, Monetary Policy Committee Unit, Bank of England 07, Monetary Policy Committee Unit, Bank of England.
  47. Barrell, Ray & Becker, Bettina & Byrne, Joseph & Gottschalk, Sylvia & Hurst, Ian & van Welsum, Desiree, 2004. "Macroeconomic policy in Europe: experiments with monetary responses and fiscal impulses," Economic Modelling, Elsevier, Elsevier, vol. 21(5), pages 877-931, September.
  48. Fatás, Antonio & Mihov, Ilian, 2001. "The Effects of Fiscal Policy on Consumption and Employment: Theory and Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2760, C.E.P.R. Discussion Papers.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Canale, Rosaria Rita & Napolitano, Oreste, 2010. "The recessive attitude of EMU policies: reflections on the italian experience, 1998–2008," MPRA Paper 24705, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:3742. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.