Fiscal Policy, Profits, and Investment

Alberto Alesina, Silvia Ardagna, Roberto Perotti () and Fabio Schiantarelli

No 7207, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. In particular, we investigate how different types of fiscal policy affect profits and , as a result, investment. We find a sizable negative effect of public spending -- and in particular of its public wage component -- on business investment. This result is consistent with models in which government employment creates wage pressure for the private sector. Various types of taxes also have negative effects on profits, but, interestingly, the effects of government spending on investment are larger than the effect of taxes. Our results have important implications for the so called 'Non-Keynesian' (i.e. expansionary) effects of fiscal adjustments.

Date: 1999-07
New Economics Papers: this item is included in nep-cdm and nep-pub
Note: ME PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (83)

Published as Alesina, Alberto, Silva Ardagna, Roberto Perotti and Fabio Schiantarelli. "Fiscal Policy, Profits, And Investment," American Economic Review, 2002, v92(3,Jun), 571-589.

Downloads: (external link)
http://www.nber.org/papers/w7207.pdf (application/pdf)

Related works:
Journal Article: Fiscal Policy, Profits, and Investment (2002)
Working Paper: Fiscal Policy, Profits, and Investment (2002)
Working Paper: Fiscal Policy, Profits, and Investment (2000)
Working Paper: Fiscal Policy, Profits and Investment (1999)
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:nbr:nberwo:7207

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w7207

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().