Fiscal Stimulus Packages and Uncertainty in Times of Crisis – The Option of Waiting Can Be Valuable, Though!
AbstractPolicymakers in the EU member states are currently shaping rescue packages to prevent the financial crisis hitting their economies with unmitigated force. Each government is responding to the emerging problems with a country-specific set of measures. Given the global nature of the crisis, would coordinated action at the European level not be a better approach?Was the German government – much-criticized for its initial reluctance to adopt massive fiscal stimulation measures – right after all to exploit the option value of waiting in a situation of high uncertainty? The answer to the second question is a qualified “yes”. However, the answer to the first one is more complex and crucially depends on how reasonable it appears to model the impact of the economic crisis as an exogenous demand shock which has hit the euro area countries.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0088.
Length: 28 pages
Date of creation: Feb 2009
Date of revision:
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
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- NEP-ALL-2009-03-22 (All new papers)
- NEP-CBA-2009-03-22 (Central Banking)
- NEP-EEC-2009-03-22 (European Economics)
- NEP-MAC-2009-03-22 (Macroeconomics)
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