Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102980
Authors: 
Gunzinger, Fabian
Sturm, Jan-Egbert
Year of Publication: 
2014
Series/Report no.: 
KOF Working Papers, KOF Swiss Economic Institute, ETH Zurich 365
Abstract: 
Relying on a large sample of countries, this paper quantifies the effect of political constraints, as measured by legislative control by the incumbent government, on the size of fiscal stimulus packages that have been put in place as reaction to the Great Recession. The results suggest that on average, political constraints reduced the size of a country's fiscal stimulus packages by between 1.2 and 2.8 percentage points of GDP (depending on the stimulus measure used). This substantial effect is significant and robust to a number of alternative dependent variables and specifications. The results are thus in line with the widely held, but never tested, perception that political reality limits the de facto application of discretionary fiscal policy as reaction to negative economic shocks.
Subjects: 
legislative control
fiscal stimulus
Great Recession
JEL: 
E02
E32
E62
E65
H12
P48
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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