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Estimating the Effects of Fiscal Policy in OECD Countries. CEPS Working Document No. 190, October 2002

Perotti, Roberto. (2002) Estimating the Effects of Fiscal Policy in OECD Countries. CEPS Working Document No. 190, October 2002. [Working Paper]

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    This paper studies the effects of fiscal policy on GDP, prices and interest rates in 5 OECD countries, using a structural Vector Autoregression approach. Its main results can be summarized as follows: 1) The estimated effects of fiscal policy on GDP tend to be small: positive government spending multipliers larger than 1 tend to be the exception; 2) The effects of fiscal policy on GDP and its components have become substantially weaker over time; 3) Under plausible values of the price elasticity, government spending has positive effects on the price level, although usually small; 4) Government spending shocks have significant effects on the nominal and real short interest rate, but of varying signs; 5) In the post-1980 period, net tax shocks have positive short run effects on the nominal interest rate, and typically negative or zero effects on prices; 6) The US is an outlier in many dimensions; responses to fiscal shocks estimated on US data are often not representative of the average OECD country included in this sample.

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    Item Type: Working Paper
    Uncontrolled Keywords: France, Italy, Spain, and Germany
    Subjects for non-EU documents: EU policies and themes > External relations > EU-US
    Countries > France
    Countries > Germany
    Countries > Italy
    Countries > Spain
    Countries > U.K.
    EU policies and themes > Policies & related activities > economic and financial affairs > fiscal policy
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 04 Oct 2009
    Page Range: p. 54
    Last Modified: 28 Feb 2020 09:42

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