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Demand-Side Stabilization Policies: What is the Evidence of their Potential?

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  • Ms. Magda E. Kandil

Abstract

Using disaggregated data for the United States, this paper explores the effects of the variability of fiscal and monetary policy shocks. Higher variability of government spending shocks around a steady-state growth trend results, on average, in a decline in aggregate demand growth and inflation, with limited effects on output growth. On the other hand, higher variability of monetary shocks results, on average, in an increase in inflation and a decline in output growth. These results indicate the desirability of avoiding large fluctuations over time in either government spending or the money supply.

Suggested Citation

  • Ms. Magda E. Kandil, 2000. "Demand-Side Stabilization Policies: What is the Evidence of their Potential?," IMF Working Papers 2000/197, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2000/197
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    Cited by:

    1. Mr. Joshua E. Greene & Ms. Magda E. Kandil, 2002. "The Impact of Cyclical Factors on the U. S. Balance of Payments," IMF Working Papers 2002/045, International Monetary Fund.
    2. Magda Kandil & Hanan Morsy, 2014. "Fiscal Stimulus and Credibility in Emerging Countries," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(3), pages 420-439, June.
    3. Magda Kandil, 2011. "Financial flows to developing and advanced countries: determinants and implications," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 10(1), pages 60-91, April.

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