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An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output
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In this paper, the authors characterize the dynamic effects of shocks in government spending and taxes on economic activity in the United States in the post-war period using a mixed structural VAR/event study approach.Abstract:
This paper characterizes the dynamic effects of shocks in government spending and taxes on economic activity in the United States in the post-war period. It does so by using a mixed structural VAR/event study approach. Identification is achieved by using institutional information about the tax and transfer systems and the timing of tax collections to identify the automatic response of taxes and spending to activity, and, by implication, to infer fiscal shocks. The results consistently show positive government spending shocks as having a positive effect on output, and positive tax shocks as having a negative effect. The multipliers for both spending and tax shocks are typically small. Turning to the effects of taxes and spending on the components of GDP, one of the results has a distinctly non-standard flavor: Both increases in taxes and increases in government spending have a strong negative effect on investment spending.read more
Citations
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An estimated dynamic stochastic general equilibrium model of the euro area. NBB Working Paper Nr. 35
Frank Smets,Raf Wouters +1 more
TL;DR: In this article, a dynamic stochastic general equilibrium (DSGE) model with sticky prices and wages for the euro area was developed and estimated with Bayesian techniques using seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment and the nominal interest rate.
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Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach*
Gauti B. Eggertsson,Paul Krugman +1 more
TL;DR: In this article, a simple New Keynesian-style model of debt-driven slumps is presented, situations in which an overhang of debt on the part of some agents, who are forced into rapid deleveraging, is depressing aggregate demand.
Estimating the Effects of Fiscal Policy in OECD Countries. ENEPRI Working Paper No. 15, October 2002
TL;DR: In this article, the authors studied the effects of fiscal policy on GDP, prices and interest rates in 5 OECD countries, using a structural vector autoregression approach, and found that the estimated effects of government spending on GDP tend to be small: positive government spending multipliers larger than 1 were the exception.
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Growth Effects of Government Expenditure and Taxation in Rich Countries
Stefan Foelster,Magnus Henrekson +1 more
TL;DR: In this paper, an econometric panel study is conducted on a sample of rich countries covering the 1970-95 period, and extended extreme bounds analyses are reported based on a regression model that tackles a number of economic issues.
Book
NBER Macroeconomics Annual 2000
TL;DR: The NBER Macroeconomics Annual as discussed by the authors presents, extends, and applies pioneering work in macroeconomics and stimulates work by macroeconomists on important policy issues, each paper in the Annual is followed by comments and discussion.
References
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Fiscal Policy in General Equilibrium
Marianne Baxter,Robert G. King +1 more
TL;DR: In this paper, the authors studied four classic macroeconomic experiments within a quantitatively restricted neoclassical model and found that permanent changes in government purchases can lead to short-run and long-run output multipliers that exceed one.
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The Behavior of U. S. Public Debt and Deficits
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Measuring Monetary Policy
Ben S. Bernanke,Ilian Mihov +1 more
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Costly Capital Reallocation and the Effects of Government Spending
TL;DR: The authors analyzes the effects of sector-specific changes in government spending in a two-sector dynamic general equilibrium model, in which the reallocation of capital across sectors is costly.