EconPapers    
Economics at your fingertips  
 

Growth Forecast Errors and Fiscal Multipliers

Olivier Blanchard and Daniel Leigh

No 2013/001, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may reflect in part learning by forecasters and in part smaller multipliers than in the early years of the crisis.

Keywords: WP; forecast error; fiscal multiplier; least squares; liquidity trap; potential GDP; Fiscal policy; forecasting; taxation; government expenditure; output fluctuations; estimation result; reports IMF staff assumption; IMF staff note; WEO database; estimation strategy; a number of economy; estimation code; Fiscal consolidation; Fiscal multipliers; Fiscal stance; Europe (search for similar items in EconPapers)
Pages: 43
Date: 2013-01-03
References: Add references at CitEc
Citations: View citations in EconPapers (694)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=40200 (application/pdf)

Related works:
Journal Article: Growth Forecast Errors and Fiscal Multipliers (2013) Downloads
Working Paper: Growth Forecast Errors and Fiscal Multipliers (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2013/001

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi (amodi@imf.org).

 
Page updated 2025-02-11
Handle: RePEc:imf:imfwpa:2013/001