Fiscal policy and growth: do financial crises make a difference?

Hans Peter Grüner, Antonio Afonso and Christina Kolerus

No 1217, Working Paper Series from European Central Bank

Abstract: In this paper we assess to what extent in the existence of a financial crisis, government spending can contribute to mitigate economic downturns in the short run and whether such impact differs in crisis and non crisis times. We use panel analysis for a set of OECD and non-OECD countries for the period 1981-2007. The fiscal multiplier for the full sample for instrumented regular and crisis spending is about 0.6-0.8 considering the sample average government spending share of GDP of about one third. Altogether, we cannot reject the hypothesis that crisis spending and regular spending have the same impact using a variation of controls, sub-samples and specifications. JEL Classification: C23, E62, E44, F43, H50

Keywords: EU; financial crisis; fiscal policy; growth; oecd; panel analysis (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Fiscal Policy and Growth: Do Financial Crises make a Difference? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101217

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