Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80802
Authors: 
Bi, Huixin
Leeper, Eric M.
Leith, Campbell
Year of Publication: 
2013
Series/Report no.: 
Bank of Canada Working Paper 2013-26
Abstract: 
The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt, and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary or successful in stabilizing government debt. We argue that the conditions that could render fiscal consolidation efforts expansionary are unlikely to apply in the current economic environment.
Subjects: 
Fiscal policy
Uncertainty and monetary policy
Economic models
JEL: 
H60
E62
E63
H30
Document Type: 
Working Paper

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