Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334603 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12247
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
In a novel survey, we study how German senior government officials systematically adjust fiscal policy in response to economic shocks, focusing on their fiscal responses to a contractionary monetary policy shock. Using randomized vignette treatments, we examine how officials update GDP and inflation expectations under fiscal and monetary policy shock scenarios and assess their preferred fiscal adjustments. Our findings show that officials predominantly respond by increasing debt and reducing spending, with tax increases playing a minor role, often combining multiple fiscal instruments. Counterfactual analysis reveals that officials' reasoning aligns with key insights from the Heterogeneous Agent New Keynesian literature.
Subjects: 
fiscal policy
monetary policy
fiscal-monetary interaction
expectation formation
survey experiment
JEL: 
D83
E62
E63
E52
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.