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The analytics of the sign restriction approach to shock identification: a framework for understanding the empirical macro puzzles

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  • Dario Caldara

    (IIES, Stockholm University)

  • Christophe Kamps

    (European Central Bank)

Abstract

We illustrate the relevance of our methodological findings with the example of fiscal policy shock identification. In the literature there is considerable disagreement on the size and even sign of fiscal multipliers. Our framework allows understanding the sources of disagreement as we are able to analytically characterize the set of fiscal multipliers consistent with standard identifying assumptions used in the literature to identify fiscal policy shocks.

Suggested Citation

  • Dario Caldara & Christophe Kamps, 2010. "The analytics of the sign restriction approach to shock identification: a framework for understanding the empirical macro puzzles," 2010 Meeting Papers 335, Society for Economic Dynamics.
    • Handle: RePEc:red:sed010:335
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    References listed on IDEAS

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