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Fiscal foresight: Do expectations have cross-border effects?

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  • Romano, Simone

Abstract

This paper estimates the cross-border effects of U.S. fiscal shocks on four main trading partners within a two-country Bayesian VAR framework. Using an identification strategy which differentiates between expected and unexpected government spending shocks, it provides evidence in support of the hypothesis that expectations alter fiscal policy transmission at both national and international level.

Suggested Citation

  • Romano, Simone, 2018. "Fiscal foresight: Do expectations have cross-border effects?," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 71-82.
    • Handle: RePEc:eee:jmacro:v:57:y:2018:i:c:p:71-82
    DOI: 10.1016/j.jmacro.2018.05.001
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    More about this item

    Keywords

    Fiscal foresight; Fiscal spillovers; VAR model; Fiscal policy;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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