Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110275
Authors: 
Gadatsch, Niklas
Hauzenberger, Klemens
Stähler, Nikolai
Year of Publication: 
2015
Series/Report no.: 
Discussion Paper, Deutsche Bundesbank 05/2015
Abstract: 
We present the estimated large-scale three-region DSGE model GEAR picturing Germany, the Euro Area and the Rest of the world. Compared to existing models of this type, GEAR incorporates a comprehensive fiscal block, involuntary unemployment and a complex international structure. We use the model to evaluate spillovers of fiscal policy, to calculate various present-value multipliers for distinct fiscal instruments, and to assess how discretionary fiscal policy in Germany and the Euro Area affected GDP growth during the global financial crisis. Our analysis suggests that spillovers of fiscal policy shocks in the Euro Area are small. Overall, spending multipliers are higher than revenue-based multipliers and are in line with those found in the literature. We find that, during the crisis, fiscal stimulus packages increased annualized quarter-on-quarter GDP growth substantially, both in Germany and in the rest of the Euro Area. The main drivers of GDP growth in Europe, however, were rest of the world and uncovered interest rate parity shocks, followed by domestic non-fiscal shocks.
Subjects: 
Fiscal Policy
Unemployment
DSGE modeling
Bayesian estimation
JEL: 
H2
J6
E32
E62
ISBN: 
978-3-95729-131-8
Document Type: 
Working Paper

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