What Is the Importance of Monetary and Fiscal Shocks in Explaining U.S. Macroeconomic Fluctuations?

Barbara Rossi and Sarah Zubairy

Journal of Money, Credit and Banking, 2011, vol. 43, issue 6, 1247-1270

Abstract: This paper analyzes the importance of monetary and fiscal policy shocks in explaining U.S. macroeconomic fluctuations, and establishes new stylized facts. The novelty of our empirical analysis is that we jointly consider both monetary and fiscal policy, whereas the existing literature only focuses on either one or the other. Our main findings are twofold: fiscal shocks are relatively more important in explaining medium cycle fluctuations whereas monetary policy shocks are relatively more important in explaining business cycle fluctuations, and failing to recognize that both monetary and fiscal policy simultaneously affect macroeconomic variables might incorrectly attribute the fluctuations to the wrong source.

Date: 2011
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https://doi.org/10.1111/j.1538-4616.2011.00424.x

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Journal Article: What Is the Importance of Monetary and Fiscal Shocks in Explaining U.S. Macroeconomic Fluctuations? (2011)
Working Paper: What is the Importance of Monetary and Fiscal Shocks in Explaining US Macroeconomic Fluctuations? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:43:y:2011:i:6:p:1247-1270

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