IDEAS home Printed from https://ideas.repec.org/a/bla/intfin/v12y2009i1p57-73.html
   My bibliography  Save this article

Why Fiscal Stimulus is Likely to Work

Author

Listed:
  • Antonio Fatás
  • Ilian Mihov

Abstract

We provide an overview of the effectiveness of fiscal policy actions by summarizing evidence from empirical and theoretical studies. Empirically, expansionary policy is found to have output multipliers greater than one. Given current economic conditions, we argue that the fiscal cost of not stabilizing the economy is likely to be much higher than the cost of a deficit that helps the economy go faster towards a recovery path.

Suggested Citation

  • Antonio Fatás & Ilian Mihov, 2009. "Why Fiscal Stimulus is Likely to Work," International Finance, Wiley Blackwell, vol. 12(1), pages 57-73, May.
  • Handle: RePEc:bla:intfin:v:12:y:2009:i:1:p:57-73
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-2362.2009.01235.x
    Download Restriction: no

    Citations

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


    Cited by:

    1. repec:col:000107:017284 is not listed on IDEAS
    2. Philipp Heimberger, 2017. "Did fiscal consolidation cause the double-dip recession in the euro area?," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(3), pages 439-458, July.
    3. Simon Voigts, 2016. "VAT multipliers and pass-through dynamics," SFB 649 Discussion Papers SFB649DP2016-026, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    4. Sebastian Gechert, 2015. "What fiscal policy is most effective? A meta-regression analysis," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 553-580.
    5. Heinrich, Tobias & Kobayashi, Yoshiharu & Bryant, Kristin A., 2016. "Public Opinion and Foreign Aid Cuts in Economic Crises," World Development, Elsevier, vol. 77(C), pages 66-79.
    6. repec:bdr:ensayo:y:2019:i:90:p:1-60 is not listed on IDEAS
    7. repec:ukb:journl:y:2018:i:245:p:45-63 is not listed on IDEAS
    8. Raju Huidrom & M. Ayhan Kose & Jamus J. Lim & Franziska L. Ohnsorge, 2019. "Why Do Fiscal Multipliers Depend on Fiscal Positions?," Koç University-TUSIAD Economic Research Forum Working Papers 1905, Koc University-TUSIAD Economic Research Forum.
    9. Kalinowski, Thomas, 2013. "Crisis management and the varieties of capitalism: Fiscal stimulus packages and the transformation of East Asian state-led capitalism since 2008," Discussion Papers, Project Group Modes of Economic Governance SP III 2013-501, WZB Berlin Social Science Center.
    10. Mthokozisi Mlilo & Umakrishnan Kollamparambi, 2016. "Fiscal policy, employment, and output in South Africa: An open economy analysis," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(3), pages 11-23, June.
    11. Fatás Antonio & Mihov Ilian, 2012. "Fiscal Policy as a Stabilization Tool," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(3), pages 1-68, October.
    12. Hellebrandt, T. & Posen, A.S. & Tolle, M., 2012. "Does monetary cooperation or confrontation lead to successful fiscal consolidation?," Financial Stability Review, Banque de France, issue 16, pages 131-142, April.
    13. Sebastian Gechert & Henner Will, 2012. "Fiscal Multipliers: A Meta Regression Analysis," IMK Working Paper 97-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    14. Adam S. Posen, 2010. "The Central Banker's Case for Doing More," Policy Briefs PB10-24, Peterson Institute for International Economics.
    15. Yasuharu Iwata, 2011. "The Government Spending Multiplier and Fiscal Financing: Insights from Japan," International Finance, Wiley Blackwell, vol. 14(2), pages 231-264, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:intfin:v:12:y:2009:i:1:p:57-73. 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: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1367-0271 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.