Fiscal Multiplier (fiscal + multiplier)

Distribution by Scientific Domains


Selected Abstracts


MIXED INDUSTRIAL STRUCTURE AND SHORT-RUN FISCAL MULTIPLIER

AUSTRALIAN ECONOMIC PAPERS, Issue 2 2008
ROBERTO CENSOLO
Existing studies on the fiscal multiplier under imperfect competition assume a symmetric market structure with identical firms. This paper examines the fiscal policy implications of introducing a multisectoral economy, where a composite commodity is offered in many varieties within a market of monopolistic competition and a homogeneous good is produced in a perfectly competitive environment. Within the context of this mixed industrial structure we show that the size of the short-run multiplier crucially depends on the composition of public expenditure chosen by the government. [source]


Effectiveness of Fiscal Policy in a Model of Imperfect Competition With Transactions Money

AUSTRALIAN ECONOMIC PAPERS, Issue 1 2000
Hassan Molana
This paper examines the effectiveness of fiscal policy in a general equilibrium macromodel with transactions money and an oligopolistic product market. The results suggest that although money may be neutral and play no direct role as a policy instrument, its indirect impact on the effectiveness of fiscal policy can be quite substantial. In particular, when money balances feature as a choice variable in the households' objective function, (i) fiscal policy becomes ineffective as the weight attached to money is reduced; (ii) the fiscal multiplier becomes negative when the elasticity of substitution between money and leisure exceeds unity; and (iii) it is possible that policy effects are in fact enhanced as the product market becomes more competitive. [source]


From Great Depression to Great Credit Crisis: similarities, differences and lessons

ECONOMIC POLICY, Issue 62 2010
Miguel Almunia
Summary The Great Depression of the 1930s and the Great Credit Crisis of the 2000s had similar causes but elicited strikingly different policy responses. While it remains too early to assess the effectiveness of current policy, it is possible to analyse monetary and fiscal responses in the 1930s as a natural experiment or counterfactual capable of shedding light on the impact of current policies. We employ vector autoregressions, instrumental variables, and qualitative evidence for 27 countries in the period 1925,39. The results suggest that monetary and fiscal stimulus was effective -- that where it did not make a difference it was not tried. They shed light on the debate over fiscal multipliers in episodes of financial crisis. They are consistent with multipliers at the higher end of those estimated in the recent literature, and with the argument that the impact of fiscal stimulus will be greater when banking systems are dysfunctional and monetary policy is constrained by the zero bound. --- Miguel Almunia, Agustín Bénétrix, Barry Eichengreen, Kevin H. O'Rourke and Gisela Rua [source]