Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307336 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11406
Publisher: 
CESifo GmbH, Munich
Abstract: 
We compute a GVAR to estimate the fiscal spillovers on output, consumption, investment, employment, and income, from 2002Q1 to 2021Q4, with 16 Euro Area (EA) countries. We found that a budget balance expansionary shock in Germany would generate positive spillovers on output and employment. Negative cross-country effects on consumption were also found. No significant spillovers on investment or income were observed following this shock. Greater and more significant spillovers were found after an EA global shock. There are also positive effects on private investment. However, a global shock still does not generate significant effects on income and increases the magnitude of the negative short-run spillovers on consumption. Greece is one of the countries more affected by short-run negative spillovers. Finally, national and global fiscal shocks put upward pressure on prices and generate negative effects on public debt. From a policy perspective, we recommend the reinforcement of the fiscal coordination framework.
Subjects: 
Euro Area
fiscal spillovers
policy coordination
GVAR
JEL: 
C32
E62
F42
F45
Document Type: 
Working Paper
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