Fiscal spillovers through informal financial channels

Austin Kennedy

Journal of International Money and Finance, 2025, vol. 157, issue C

Abstract: This paper examines fiscal policy spillovers through informal international financial channels, using the US stimulus checks as a positive, sudden, and direct fiscal shock. I utilize granular, transaction-level cryptocurrency data combined with an algorithm to probabilistically identify cross-border “crypto vehicle" transactions to construct bilateral cryptocurrency flows between countries. Using a difference-in-differences strategy, I compare cryptocurrency outflows between the US and other high-income countries and find a sharp but temporary increase in cryptocurrency outflows as a result of the direct stimulus. I quantify the fiscal spillover relative to expenditure and place an upper bound of 2.52 % through this channel. This implies that fiscal spillovers through remittance channels are likely modest in size.

Keywords: Policy spillovers; Informal finance; Cryptocurrency; Remittances; Fiscal policy (search for similar items in EconPapers)
JEL-codes: F24 G20 H30 O17 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:157:y:2025:i:c:s0261560625001135

DOI: 10.1016/j.jimonfin.2025.103378

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