Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259885 
Year of Publication: 
2004
Series/Report no.: 
Working Paper No. 2004:12
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
In this paper, we study the effects of fiscal policy during different fiscal policy regimes. More specifically, we investigate how different factors, such as size, duration and composition of fiscal changes, can alter the effects of fiscal policy on private consumption. Using an unbalanced panel of 19 OECD countries during the period 1960-2000, we find that transfer changes are believed to be permanent during fiscal contractions. Hence, it is more likely that an expansionary fiscal contraction will occur if the government cuts transfers. Our results highlight the importance of accounting for specific circumstances, such as the debt and deficit position, when studying expansionary fiscal contractions. The results also indicate that expansionary fiscal contractions are likely to come at a considerable social cost.
Subjects: 
Panel data
Household consumption
Fiscal policy
Non-Keynesian effects
JEL: 
C23
E21
E62
H31
Document Type: 
Working Paper

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