Please use this identifier to cite or link to this item: http://hdl.handle.net/2445/63557
Title: Estimating the effects of fiscal policy under the budget constraint
Author: Claeys, Peter Gunther
Keywords: Política fiscal
Deute públic
Impostos
Anàlisi d'impacte econòmic
Finances públiques
Fiscal policy
Public debt
Taxation
Economic impact analysis
Public finance
Issue Date: 2007
Publisher: Universitat de Barcelona. Institut de Recerca en Economia Aplicada Regional i Pública
Abstract: I reconsider the short-term effects of fiscal policy when both government spending and taxes are allowed to respond to the level of public debt. I embed the long-term government budget constraint in a VAR, and apply this common trends model to US quarterly data. The results overturn some widely held beliefs on fiscal policy effects. The main finding is that expansionary fiscal policy has contractionary effects on output and inflation. Ricardian effects may dominate when fiscal expansions are expected to be adjusted by future tax rises or spending cuts. The evidence supports RBC models with distortionary taxation. We can discard some alternative interpretations that are based on monetary policy reactions or supply-side effects.
It is part of: IREA – Working Papers, 2007, IR07/015
URI: http://hdl.handle.net/2445/63557
ISSN: 2014-1254
Appears in Collections:Documents de treball (Institut de Recerca en Economia Aplicada Regional i Pública (IREA))

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