Measuring the Output Responses to Fiscal Policy
TLDR
This paper found large differences in the size of the spending multipliers in recessions and expansions with fiscal policy being considerably more effective in recession than in expansions, with military spending having the largest multiplier.Abstract:
A key issue in current research and policy is the size of fiscal multipliers when the economy is in recession. We provide three insights. First, using regime-switching models, we find large differences in the size of spending multipliers in recessions and expansions with fiscal policy being considerably more effective in recessions than in expansions. Second, we estimate multipliers for more disaggregate spending variables which behave differently relative to aggregate fiscal policy shocks, with military spending having the largest multiplier. Third, we show that controlling for predictable components of fiscal shocks tends to increase the size of the multipliers in recessions.read more
Citations
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Journal ArticleDOI
The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
TL;DR: This paper investigated the impact of tax changes on economic activity and found that tax increases are highly contractionary and that the behavior of output following these more exogenous changes indicates that the effects of tax increases were strongly significant, highly robust, and much larger than those obtained using broader measures of tax change.
Book ChapterDOI
Macroeconomic Shocks and Their Propagation
TL;DR: This article reviewed and synthesized our current understanding of the shocks that drive economic fluctuations and concluded that we are much closer to understanding the shocks in economic fluctuations than we were 20 years ago.
Journal ArticleDOI
Can Government Purchases Stimulate the Economy
TL;DR: The authors assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate: a temporary, deficit-financed increase in government purchases, and conclude that the multiplier for this type of spending is probably between 0.8 and 1.5.
Journal ArticleDOI
Growth Forecast Errors and Fiscal Multipliers
Olivier Blanchard,Daniel Leigh +1 more
TL;DR: This article investigated the relation between growth forecast errors and planned fiscal consolidation during the crisis and found that stronger planned consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis.
Journal ArticleDOI
Fiscal Stimulus in a Monetary Union: Evidence from U.S. Regions
Emi Nakamura,Jon Steinsson +1 more
TL;DR: This paper used historical data on military procurement to estimate the effects of government spending and developed a framework for interpreting this estimate and relating it to estimates of the standard closed economy aggregate multiplier, which is highly sensitive to how strongly aggregate monetary and tax policy “leans against the wind.
References
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Book
Bayesian Data Analysis
TL;DR: Detailed notes on Bayesian Computation Basics of Markov Chain Simulation, Regression Models, and Asymptotic Theorems are provided.
Journal ArticleDOI
Time series analysis
TL;DR: A ordered sequence of events or observations having a time component is called as a time series, and some good examples are daily opening and closing stock prices, daily humidity, temperature, pressure, annual gross domestic product of a country and so on.
Journal ArticleDOI
Impulse response analysis in nonlinear multivariate models
TL;DR: In this paper, the authors present a unified approach to impulse response analysis which can be used for both linear and nonlinear multivariate models and demonstrate the use of these measures for a nonlinear bivariate model of US output and the unemployment rate.
Journal ArticleDOI
The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
TL;DR: This paper investigated the impact of tax changes on economic activity and found that tax increases are highly contractionary and that the behavior of output following these more exogenous changes indicates that the effects of tax increases were strongly significant, highly robust, and much larger than those obtained using broader measures of tax change.