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Comparing fiscal multipliers across models and countries in Europe

Author

Listed:
  • Gregory de Walque

    () (Research Department, NBB)

  • Juha Kilponen
  • Massimiliano Pisani
  • Sebastian Schmidt
  • Vesna Corbo
  • Tibor Hledik
  • Josef Hollmayr
  • Samuel Hurtado
  • Paulo Júlio
  • Dmitry Kulikov
  • Matthieu Lemoine
  • Matija Lozej
  • Henrik Lundvall
  • José R. Maria
  • Brian Micallef
  • Dimitris Papageorgiou
  • Jakub Rysanek,
  • Dimitrios Sideris
  • Carlos Thomas

Abstract

This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes.

Suggested Citation

  • Gregory de Walque & Juha Kilponen & Massimiliano Pisani & Sebastian Schmidt & Vesna Corbo & Tibor Hledik & Josef Hollmayr & Samuel Hurtado & Paulo Júlio & Dmitry Kulikov & Matthieu Lemoine & Matija Lo, 2015. "Comparing fiscal multipliers across models and countries in Europe," Working Paper Research 278, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201503-278
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    More about this item

    Keywords

    Fiscal policy; Output multipliers; Model comparison; Zero lower bound;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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