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Aggregate Effects of Budget Stimulus: Evidence from the Large Fiscal Expansions Database

Author

Listed:
  • Jeremie Cohen-Setton

    (Peterson Institute for International Economics)

  • Egor Gornostay

    (Peterson Institute for International Economics)

  • Colombe Ladreit de Lacharriere

    (Peterson Institute for International Economics)

Abstract

This paper estimates the effects of fiscal stimulus on economic activity using a novel database on large fiscal expansions for 17 OECD countries for the period 1960-2006. The database is constructed by combining the statistical approach to identifying large shifts in fiscal policy with narrative evidence from contemporaneous policy documents. When correctly identified, large fiscal stimulus packages are found to have strong and persistent expansionary effects on economic activity, with a multiplier of 1 or above. The effects of stimulus are largest in slumps and smallest in booms.

Suggested Citation

  • Jeremie Cohen-Setton & Egor Gornostay & Colombe Ladreit de Lacharriere, 2019. "Aggregate Effects of Budget Stimulus: Evidence from the Large Fiscal Expansions Database," Working Paper Series WP19-12, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp19-12
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    File URL: https://www.piie.com/publications/working-papers/aggregate-effects-budget-stimulus-evidence-large-fiscal-expansions
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    Citations

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    Cited by:

    1. Thibault Lemaire, 2020. "Fiscal Consolidations and Informality in Latin America and the Caribbean," Documents de travail du Centre d'Economie de la Sorbonne 20004, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Mr. Tidiane Kinda & Andras Lengyel & Kaustubh Chahande, 2022. "Fiscal Multipliers During Pandemics," IMF Working Papers 2022/149, International Monetary Fund.
    3. M. P. Afanas’ev & N. N. Shash, 2021. "From Surplus to Deficit Fiscal Policy," Studies on Russian Economic Development, Springer, vol. 32(5), pages 476-484, September.
    4. Dennis Bonam & Paul Konietschke, 2020. "Tax multipliers across the business cycle," Working Papers 699, DNB.
    5. Mstislav Afanasyev & Natalia Shash, 2020. "Budget Surplus Management And Fiscal Fine Tuning," Public administration issues, Higher School of Economics, issue 6, pages 84-97.
    6. Angela Köppl & Margit Schratzenstaller, 2022. "Macroeconomic Effects of Green Recovery Programmes. Conceptual Framing and a Review of the Empirical Literature," WIFO Working Papers 646, WIFO.

    More about this item

    Keywords

    Fiscal Policy; Public Economics; Public Finance; Tax Elasticities; National Government Expenditure; National Budget; Macroeconomic Policy; Stabilization; Macroeconomic History;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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