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The Effects of Discretionary Fiscal Stimulus: A Survey

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  • Hristov, Atanas

Abstract

This paper surveys evidence on fiscal multipliers from the Euro area and the United States obtained by direct, cross-state or economywide measures of the effects of broad-based tax cuts and increases in government purchases. In view of the evidence in the literature I conclude that that fiscal policy may be substantially more effective when the proportion of households and firms that are liquidity constrained is high and when utilization of factors of production is low.

Suggested Citation

  • Hristov, Atanas, 2012. "The Effects of Discretionary Fiscal Stimulus: A Survey," MPRA Paper 44714, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:44714
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    References listed on IDEAS

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    1. Alan S. Blinder, 2004. "The Case Against the Case Against Discretionary Fiscal Policy," Working Papers 102, Princeton University, Department of Economics, Center for Economic Policy Studies..
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    10. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Fiscal Multipliers in Recession and Expansion," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 63-98, National Bureau of Economic Research, Inc.
    11. Ilzetzki, Ethan & Mendoza, Enrique G. & Végh, Carlos A., 2013. "How big (small?) are fiscal multipliers?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 239-254.
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    15. repec:pri:cepsud:100blinder is not listed on IDEAS
    16. Giancarlo Corsetti & André Meier & Gernot J. Müller, 2012. "What determines government spending multipliers? [Mafia and public spending: Evidence of the fiscal multiplier from a quasi-experiment’, mimeo]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(72), pages 521-565.
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    20. Gauti B. Eggertsson & Michael Woodford, 2006. "Optimal Monetary and Fiscal Policy in a Liquidity Trap," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 75-144, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Christian Breuer, 2014. "Fiscal policy and growth forecast revisions," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(04), pages 77-79, January.
    2. Berg Tim Oliver, 2015. "Time Varying Fiscal Multipliers in Germany," Review of Economics, De Gruyter, vol. 66(1), pages 13-46, April.
    3. Christian Breuer, 2014. "Fiscal policy and growth forecast revisions," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(4), pages 77-79, January.

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    More about this item

    Keywords

    Multipliers; Fiscal policy; Monetary policy; Liquidity constraints;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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