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Title:Estimating the effects of coordinated fiscal actions in the euro area PDF Logo
Authors:Hebous, Shafik
Zimmermann, Tom
Issue Date:2012
Series/Report no.:CESifo Working Paper: Fiscal Policy, Macroeconomics and Growth 3912
Abstract:We estimate spillover effects of a fiscal shock in one member country in the euro area on outputs of the rest of the members, using a Global Vector Autoregression (GVAR) model. We compare the effects of a domestic fiscal shock with those of a similar size area-wide shock expressed as a weighted average of the fiscal shocks across all member countries. According to our estimates, the impact of an area-wide fiscal shock on output of a member country tends to be positive and larger than that of a domestic shock. Since the cost of participating in the area-wide shock is lower than the cost of a similar size domestic shock, our finding indicates the importance of coordinated fiscal actions in the euro area.
Subjects:fiscal policy coordination
cross-border spillovers
open economy macroeconomics
European integration
Global VAR
JEL:E62
F41
F42
F15
H50
H60
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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