Regional fiscal spillovers: The role of trade linkages

Luca Bettarelli, Davide Furceri, Pietro Pizzuto and Khatereh Yarveisi

Journal of International Money and Finance, 2024, vol. 140, issue C

Abstract: This paper examines how fiscal shocks in a given country affect foreign regions through regional trade linkages. Applying the local projection method to a panel of 222 NUTS-2 regions in 20 European countries during the period 1993–2020, we find that countries-to-regions fiscal spillovers are positive, statistically significant, persistent, and non-negligible in size. In addition, fiscal spillovers tend to be larger when the recipient region experiences a recession, when monetary policy of the recipient country is at the zero-lower-bound, and when the recipient region and the source country are both part of the European Monetary Union.

Keywords: Fiscal shocks; Fiscal spillovers; Regional trade; Regional spillovers (search for similar items in EconPapers)
JEL-codes: E52 E62 F19 F41 R10 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:140:y:2024:i:c:s0261560623001961

DOI: 10.1016/j.jimonfin.2023.102995

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