Working Papers, Department of Economics, Lund University
Fiscal Policy Regimes and Household Consumption
Abstract: In this paper, we study the effects of fiscal policy
during different fiscal policy regimes. More specifically, we investigate
how different factors, such as size, duration and composition of fiscal
changes, can alter the effects of fiscal policy on private consumption.
Using an unbalanced panel of 19 OECD countries during the period 1960-2000,
we find that transfer changes are believed to be permanent during fiscal
contractions. Hence, it is more likely that an expansionary fiscal
contraction will occur if the government cuts transfers. Our results
highlight the importance of accounting for specific circumstances, such as
the debt and deficit position, when studying expansionary fiscal
contractions. The results also indicate that expansionary fiscal
contractions are likely to come at a considerable social cost.
Keywords: Panel data; Household consumption; Fiscal policy; Non-Keynesian effects; (follow links to similar papers)
JEL-Codes: C23; E21; E62; H31; (follow links to similar papers)
29 pages, March 25, 2004
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to David Edgerton ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom