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Europe > Ireland

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy x
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Cover IMF Working Papers
What Determines Government Spending Multipliers?
Gernot Müller
,
Mr. Andre Meier
, and
Giancarlo Corsetti
This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis.
Keywords:
WP; government spending; exchange rate regime; monetary policy; stimulus package; Multiplier; fiscal policy; financial crisis; public finances; government spending shock; government spending multiplier; transmission mechanism; interest rate; fiscal policy transmission; standard error; financial crisis episode; response to a spending shock; exchange rate response; trade deficit; identifying government spending; Exchange rate arrangements; Real exchange rates; Global
Cover IMF Working Papers
Signaling Fiscal Regime Sustainability
Mr. Alessandro Prati
and
Francesco Drudi
This paper proposes a signaling model that offers a new perspective on why governments deviate from optimal tax smoothing and delay debt stabilization. In our model, dependable—but not fully credible—governments have an incentive to tighten the fiscal regime when the signaling effect on credit ratings is larger (that is, when a sufficiently large stock of debt has been accumulated). At this point, they may deviate from tax smoothing not to be mimicked by weak governments. The model predicts that primary balances and debt stocks are complementary inputs in the credit rating function as tests on Italian, Irish, Belgian, and Danish data show.
Keywords:
WP; debt stock; monetary policy; mover accent; signaling; fiscal stabilization; tax smoothing; debt sustainability; credit ratings; debt financing cost; debt level; debt maturing; rating function; debt accumulation; stock of debt; Fiscal stance; Stocks; Global; equilibrium existence; signaling model; Balance-to-GDP ratio; pooling equilibrium