 U.S. fiscal indicators, inflation and outputYunus Aksoy and Giovanni Melina The North American Journal of Economics and Finance, 2011, vol. 22, issue 3, 221-236 Abstract: In this paper we explore the information content of a large set of fiscal indicators for U.S. real output growth and inflation. We provide evidence that fluctuations in certain fiscal variables contain valuable information to predict fluctuations in output and prices. The distinction between federal and state-local fiscal indicators yields useful insights and helps define a new set of stylized facts for U.S. macroeconomic conditions. First, we find that variations in state-local indirect taxes as well as state government surplus or deficit help predict output growth. Next, the federal counterparts of these indicators contain valuable information for inflation. Finally, state-local expenditures help predict U.S. inflation. A set of formal and informal stability tests confirm that these relationships are stable. The fiscal indicators in questions are also among the ones that yield the best in-sample and out-of-sample performances. Keywords: Information value; State-local finances; Fiscal variables; Granger causality (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:22:y:2011:i:3:p:221-236 DOI: 10.1016/j.najef.2011.02.001 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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