Commentary: Fiscal Stimulus and the Promise of Future Spending Cuts

Volker Wieland

International Journal of Central Banking, 2010, vol. 6, issue 1, 39-50

Abstract: Recent evaluations of the fiscal stimulus packages enacted in 2009 in the United States and Europe such as Cogan et al. (2009) and Cwik and Wieland (2009) suggest that the GDP effects will be modest due to crowding out of private consumption and investment. Corsetti, Meier, and Müller (2009, 2010) argue that spending shocks are typically followed by consolidations with substantive spending cuts, which enhance the short-run stimulus effect. This note investigates the implications of this argument for the estimated impact of recent stimulus packages and the case for discretionary fiscal policy.

JEL-codes: C52 E62 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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