Fiscal Policy in the Bundestag: Textual Analysis and Macroeconomic Effects

Albina Latifi (), Viktoriia Naboka-Krell (), Peter Tillmann () and Peter Winker
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Albina Latifi: Justus Liebig University Giessen
Viktoriia Naboka-Krell: Justus Liebig University Giessen
Peter Tillmann: Justus Liebig University Giessen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Fiscal policy is made in parliament. We go to the roots of changes of fiscal policy in Germany and use a novel data set on all parliamentary speeches in the Bundestag from 1960 to 2021. We propose an embedding-based approach, which allows the representation of words and documents in a shared vector space, in order to measure fiscal policy-related sentiment in parliamentary debates at a scale from contractionary to expansionary. For this purpose, a dictionary containing terms related to expansionary and contractionary policy measures is created. We put fiscal sentiment into a series of recursively-identified vector autoregressive (VAR) models to show that a change in fiscal sentiment causes a change in government spending and has strong effects on the macroeconomy. The results support the notion that the debate in parliament contains information for the identification of government spending shocks.

Keywords: text mining; word embeddings; VAR models; identification; government spending (search for similar items in EconPapers)
JEL-codes: C89 E60 E62 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2023
New Economics Papers: this item is included in nep-eec
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https://www.uni-marburg.de/en/fb02/research-groups ... 3/07-2023_latifi.pdf First 202307 (application/pdf)

Related works:
Journal Article: Fiscal policy in the Bundestag: Textual analysis and macroeconomic effects (2024)
Working Paper: Fiscal Policy in the Bundestag: Textual Analysis and Macroeconomic Effects (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202307

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