Working Papers,
Lund University, Department of Economics

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

JEL-codes: C23; E21; E62; H31

29 pages, March 25, 2004

Full text files

WP04_12  Full text

Download statistics

• Lund University, Department of Economics
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Iker Arregui Alegria ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:lunewp:2004_012This page generated on 2024-09-18 13:05:20.