Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156212
Authors: 
Belke, Ansgar
Kronen, Dominik
Osowski, Thomas
Year of Publication: 
2015
Series/Report no.: 
ROME Discussion Paper Series 15-04
Abstract: 
This paper analyzes the effect of planned fiscal consolidation on GDP growth forecast errors from the years 2010-2013 using cross section analyses and fixed effects estimations. Our main findings are that fiscal multipliers have been underestimated in most instances for the year 2011 while we find little to no evidence for the years 2010 and especially the latter years 2012/13. Since the underestimation of fiscal multipliers seems to have decreased over time, it may indicate learning effects of forecasters. However, the implications for fiscal policy should be considered with caution as a false forecast of fiscal multipliers does not confirm that austerity is the wrong fiscal approach but only suggests a too optimistic assessment of fiscal multipliers for the year 2011.
Subjects: 
fiscal multiplier
austerity
growth forecast errors
panel econometrics
JEL: 
C23
E61
E62
G01
Document Type: 
Working Paper

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