Fiscal Policy and the Business Cycle

György Molnár (), Gábor Dániel Soós () and Balázs Világi ()
Additional contact information
György Molnár: Magyar Nemzeti Bank
Gábor Dániel Soós: Magyar Nemzeti Bank
Balázs Világi: Magyar Nemzeti Bank

Financial and Economic Review, 2017, vol. 16, issue 4, 58-85

Abstract: After the 2007–2008 financial crisis and the subsequent prolonged, deep recession, the question of whether fiscal policy can be applied to stimulate the economy came into focus, as conventional tools of monetary policy became ineffective. Accordingly, the related research also received a new boost. The purpose of our paper is to present the new research results, which mainly focus on whether fiscal policy can be applied to influence business cycles. Although there is still much debate, the claim that the effects of fiscal policy are not constant, but rather depend on the state of the business cycle, has been supported by numerous theoretical models and empirical results: in prolonged, deep recessions, and especially in the case of a liquidity trap, the multiplier of government expenditures is high, while in the case of booms it is relatively low.

Keywords: fiscal policy; expenditure multiplier; business cycles; liquidity trap; debtconstrained households (search for similar items in EconPapers)
JEL-codes: E12 E21 E52 E62 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://english.hitelintezetiszemle.hu/letoltes/fer ... -r-soo-s-vila-gi.pdf (application/pdf)

Related works:
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:mnb:finrev:v:16:y:2017:i:4:p:58-85

Access Statistics for this article

More articles in Financial and Economic Review from Magyar Nemzeti Bank (Central Bank of Hungary) Contact information at EDIRC.
Bibliographic data for series maintained by Morvay Endre ( this e-mail address is bad, please contact ).