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Fiscal Multipliers During The Global Financial Crisis: Fiscal And Monetary Interaction Matters

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  • Ju Hyun Pyun
  • Dong-Eun Rhee

Abstract

type="main" xml:id="coep12067-abs-0001"> This study investigates the fiscal multipliers of 21 Organization for Economic Co-operation and Development countries during the global financial crisis using panel vector auto regression methodology. Our findings suggest that the 1-year fiscal multiplier was greater than 1 during the crisis, whereas it was less than 1 before the crisis because of different fiscal and monetary interactions. The combination of expansionary monetary and fiscal policies during the crisis boosted gross domestic product more effectively through internal and external transmissions: investment crowding-out was limited, and net exports were spurred by the policy interaction. In addition, our results are robust to various specifications. ( JEL E61 , E63 , E65)

Suggested Citation

  • Ju Hyun Pyun & Dong-Eun Rhee, 2015. "Fiscal Multipliers During The Global Financial Crisis: Fiscal And Monetary Interaction Matters," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 207-220, January.
    • Handle: RePEc:bla:coecpo:v:33:y:2015:i:1:p:207-220
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    File URL: http://hdl.handle.net/10.1111/coep.2015.33.issue-1
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    References listed on IDEAS

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    Cited by:

    1. Jair N. Ojeda‐Joya & Oscar E. Guzman, 2019. "The Size Of Fiscal Multipliers And The Stance Of Monetary Policy In Developing Economies," Contemporary Economic Policy, Western Economic Association International, vol. 37(4), pages 621-640, October.
    2. Attinasi, Maria Grazia & Klemm, Alexander, 2016. "The growth impact of discretionary fiscal policy measures," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 265-279.
    3. Eichler, Stefan & Pyun, Ju Hyun, 2022. "Ricardian equivalence, foreign debt and sovereign default risk," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 21-49.

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    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • 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
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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