IDEAS home Printed from https://ideas.repec.org/a/rre/publsh/v42y2012i3p249-263.html
   My bibliography  Save this article

Two-Region DSGE Analysis of Regionally Targeted Fiscal Policy

Author

Listed:
  • Kenichi Tamegawa

    (Meiji University)

Abstract

In this paper, we explain how to construct a dynamic stochastic general equilibrium model consisting of N regions, and use the two-region version of the model to simulate the effects of fiscal policy on the economy. Our policy simulation shows that the fiscal multiplier depends on which government (local or central) implements the fiscal policy and where the policy is implemented.

Suggested Citation

  • Kenichi Tamegawa, 2012. "Two-Region DSGE Analysis of Regionally Targeted Fiscal Policy," The Review of Regional Studies, Southern Regional Science Association, vol. 42(3), pages 249-263, Winter.
    • Handle: RePEc:rre:publsh:v:42:y:2012:i:3:p:249-263
    as

    Download full text from publisher

    File URL: http://journal.srsa.org/ojs/index.php/RRS/article/view/42.3.4/pdf
    File Function: To View On Journal Page
    Download Restriction: no
    File URL: http://journal.srsa.org/ojs/index.php/RRS/article/download/42.3.4/pdf
    File Function: To Download Article
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gali­, Jordi & Monacelli, Tommaso, 2008. "Optimal monetary and fiscal policy in a currency union," Journal of International Economics, Elsevier, vol. 76(1), pages 116-132, September.
    2. Forni, Lorenzo & Monteforte, Libero & Sessa, Luca, 2009. "The general equilibrium effects of fiscal policy: Estimates for the Euro area," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 559-585, April.
    3. Valerie A. Ramey, 2011. "Identifying Government Spending Shocks: It's all in the Timing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 1-50.
    4. Fujita , Masahisa & Krugman, Paul, 2004. "The new economic geography: Past, present and the future," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 4, pages 177-206.
    5. Jordi Galí & J. David López-Salido & Javier Vallés, 2007. "Understanding the Effects of Government Spending on Consumption," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 227-270, March.
    6. Roel Beetsma & Massimo Giuliodori, 2011. "The Effects of Government Purchases Shocks: Review and Estimates for the EU," Economic Journal, Royal Economic Society, vol. 121(550), pages 4-32, February.
    7. Andrew Mountford & Harald Uhlig, 2009. "What are the effects of fiscal policy shocks?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 960-992.
    8. Benigno, Pierpaolo, 2004. "Optimal monetary policy in a currency area," Journal of International Economics, Elsevier, vol. 63(2), pages 293-320, July.
    9. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005. "Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 1-45, February.
    10. Günter Coenen & Roland Straub, 2005. "Does Government Spending Crowd in Private Consumption? Theory and Empirical Evidence for the Euro Area," International Finance, Wiley Blackwell, vol. 8(3), pages 435-470, December.
    11. Masahisa Fujita & Paul Krugman, 2004. "The new economic geography: Past, present and the future," Advances in Spatial Science, in: Raymond J. G. M. Florax & David A. Plane (ed.), Fifty Years of Regional Science, pages 139-164, Springer.
    12. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
    13. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    14. Ratto, Marco & Roeger, Werner & Veld, Jan in 't, 2009. "QUEST III: An estimated open-economy DSGE model of the euro area with fiscal and monetary policy," Economic Modelling, Elsevier, vol. 26(1), pages 222-233, January.
    15. Linnemann, Ludger, 2006. "The Effect of Government Spending on Private Consumption: A Puzzle?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(7), pages 1715-1735, October.
    16. Lombardo, Giovanni, 2006. "Inflation targeting rules and welfare in an asymmetric currency area," Journal of International Economics, Elsevier, vol. 68(2), pages 424-442, March.
    17. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leonid A. Serkov, 2018. "The External and Internal Shocks' Impact on Macroeconomic Indicators of a Region," Journal of New Economy, Ural State University of Economics, vol. 19(4), pages 45-63, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shafik Hebous, 2011. "The Effects Of Discretionary Fiscal Policy On Macroeconomic Aggregates: A Reappraisal," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 674-707, September.
    2. Thomas Brand, 2017. "Vitesse et composition des ajustements budgétaires en équilibre général : une analyse appliquée à la zone euro," Revue économique, Presses de Sciences-Po, vol. 68(HS1), pages 159-182.
    3. Clancy, Daragh & Jacquinot, Pascal & Lozej, Matija, 2014. "The Effects of Government Spending in a Small Open Economy within a Monetary Union," Research Technical Papers 12/RT/14, Central Bank of Ireland.
    4. Furlanetto, Francesco, 2011. "Fiscal stimulus and the role of wage rigidity," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 512-527, April.
    5. Tobias Cwik & Volker Wieland, 2011. "Keynesian government spending multipliers and spillovers in the euro area [Fiscal policy and growth: do financial crises make a difference?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(67), pages 493-549.
    6. Mr. Michael Kumhof & Huixin Bi, 2009. "Jointly Optimal Monetary and Fiscal Policy Rules under Borrowing Constraints," IMF Working Papers 2009/286, International Monetary Fund.
    7. Quaghebeur, Ewoud, 2019. "Learning And The Size Of The Government Spending Multiplier," Macroeconomic Dynamics, Cambridge University Press, vol. 23(8), pages 3189-3224, December.
    8. Forni, Lorenzo & Monteforte, Libero & Sessa, Luca, 2009. "The general equilibrium effects of fiscal policy: Estimates for the Euro area," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 559-585, April.
    9. Barbara Annicchiarico & Fabio Di Dio & Francesco Felici & Francesco Nucci, "undated". "Macroeconomic Modelling and the Effects of Policy Reforms: an Assessment for Italy using ITEM and," Working Papers 1, Department of the Treasury, Ministry of the Economy and of Finance.
    10. Cavalcanti, Marco A. F. H. & Vereda, Luciano, 2015. "Fiscal Policy Multipliers in a DSGE Model for Brazil," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 35(2), March.
    11. Sarah Zubairy, 2014. "On Fiscal Multipliers: Estimates From A Medium Scale Dsge Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(1), pages 169-195, February.
    12. Bhattarai, Keshab & Trzeciakiewicz, Dawid, 2017. "Macroeconomic impacts of fiscal policy shocks in the UK: A DSGE analysis," Economic Modelling, Elsevier, vol. 61(C), pages 321-338.
    13. Anna Kormilitsina & Sarah Zubairy, 2018. "Propagation Mechanisms for Government Spending Shocks: A Bayesian Comparison," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(7), pages 1571-1616, October.
    14. Stefano Grassi & Marco Lorusso & Francesco Ravazzolo, 2021. "Adaptive Importance Sampling for DSGE Models," BEMPS - Bozen Economics & Management Paper Series BEMPS84, Faculty of Economics and Management at the Free University of Bozen.
    15. Sarah Zubairy, 2014. "On Fiscal Multipliers: Estimates From A Medium Scale Dsge Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 169-195, February.
    16. Stähler, Nikolai & Thomas, Carlos, 2012. "FiMod — A DSGE model for fiscal policy simulations," Economic Modelling, Elsevier, vol. 29(2), pages 239-261.
    17. Leeper, Eric M. & Plante, Michael & Traum, Nora, 2010. "Dynamics of fiscal financing in the United States," Journal of Econometrics, Elsevier, vol. 156(2), pages 304-321, June.
    18. Barbara Annicchiarico & Fabio Di Dio & Francesco Felici & Francesco Nucci, 2014. "Assessing Policy Reforms for Italy Using ITEM and QUEST III," Rivista di Politica Economica, SIPI Spa, issue 3, pages 211-244, July-Sept.
    19. Patrick Fève & Jean‐Guillaume Sahuc, 2017. "In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(3), pages 704-718, April.
    20. Marattin, Luigi & Salotti, Simone, 2011. "On the usefulness of government spending in the EU area," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 780-795.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rre:publsh:v:42:y:2012:i:3:p:249-263. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tammy Leonard & Lei Zhang (email available below). General contact details of provider: http://www.srsa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.