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The Impact of Fiscal Shocks on the Irish Economy

  • Benetrix, Agustin

    (Trinity College Dublin)

  • Lane, Philip R.

    (Trinity College Dublin)

We study the short-run effects of shocks to government spending on Ireland’s output and its real exchange rate. We show that the impact of government spending shocks critically depend on the nature of the fiscal innovation. Our main finding is that there are important differences between shocks to public investment and shocks to government consumption. Moreover, within the latter category, shocks to the wage and non-wage components also have dissimilar effects.

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Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 40 (2009)
Issue (Month): 4 ()
Pages: 407-434

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Handle: RePEc:eso:journl:v:40:y:2009:i:4:p:407-434
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  14. Ramey, Valerie A. & Shapiro, Matthew D., 1998. "Costly capital reallocation and the effects of government spending," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 145-194, June.
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  17. Philip R. Lane & Roberto Perotti, 2001. "The Importance of Composition of Fiscal Policy: Evidence from Different Exchange Rate Regimes," Trinity Economics Papers 200116, Trinity College Dublin, Department of Economics.
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  22. Agustín Bénétrix & Philip Lane, 2010. "Fiscal Shocks and The Sectoral Composition of Output," Open Economies Review, Springer, vol. 21(3), pages 335-350, July.
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