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The Effectiveness of Fiscal Policy in Stimulating Economic Activity: A Review of the Literature
Author:
Ms. Selma Mahfouz null

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,
Mr. Richard Hemming
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Mr. Michael Kell
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Series:
IMF Working Papers
Volume/Issue:
Volume 2002: Issue 208
Language:
English
Publication Date:
01 Dec 2002
DOI:
https://doi.org/10.5089/9781451874716.001
ISBN:
9781451874716
ISSN:
1018-5941
Pages:
52
Keywords:
WP; monetary policy; current account; fiscal policy policy change; Ricardian equivalence; Fiscal policy; economic activity; fiscal multipliers; open economy; cost of capital; crowding out effect; money demand; low income; government spending shock; discretionary fiscal policy change; Ricardian behavior results in consumption; consumption effects; Ricardian behavior result; Government debt management; Fiscal stimulus; Global; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund