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On the predictability of narrative fiscal adjustments

Author

Listed:
  • Pablo Hernández de Cos

    () (Banco de España)

  • Enrique Moral-Benito

    () (Banco de España)

Abstract

In an influential paper, Devries et al. (2011) construct narrative series of tax- and spending-based fiscal adjustments for a panel of OECD countries. In this paper, we find that the adjustments based on spending cuts can be predicted on the basis of past output growth and other macroeconomic variables. Moreover, we illustrate that this source of endogeneity may generate significant differences in the estimated multipliers.

Suggested Citation

  • Pablo Hernández de Cos & Enrique Moral-Benito, 2015. "On the predictability of narrative fiscal adjustments," Working Papers 1516, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:1516
    as

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/15/Fich/dt1516e.pdf
    File Function: First version, June 2015
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    References listed on IDEAS

    as
    1. Juan S. Mora-Sanguinetti & Nuno Garoupa, 2015. "Litigation in Spain 2001-2010: Exploring the market for legar services," Working Papers 1505, Banco de España;Working Papers Homepage.
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    Cited by:

    1. Breuer, Christian, 2017. "Expansionary Austerity and Reverse Causality," MPRA Paper 77556, University Library of Munich, Germany.
    2. Alesina, Alberto F & Favero, Carlo A. & Giavazzi, Francesco, 2019. "Effects of Austerity: Expenditure- and Tax-based Approaches," CEPR Discussion Papers 13565, C.E.P.R. Discussion Papers.
    3. Alberto Alesina & Gualtiero Azzalini & Carlo Favero & Francesco Giavazzi & Armando Miano, 2018. "Is it the “How” or the “When” that Matters in Fiscal Adjustments?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 66(1), pages 144-188, March.

    More about this item

    Keywords

    fiscal adjustment; fiscal multiplier;

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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