International Spillovers from U.S. Fiscal Policy Shocks

Stephen Nicar

Open Economies Review, 2015, vol. 26, issue 5, 1097 pages

Abstract: I estimate the effect of U.S. government spending and tax shocks on Canada and the U.K. from 1975 to 2014, and on Japan from 1979 to 2014. Spending and tax shocks are identified using sign restrictions on the impulse responses from a vector autoregression (VAR). I find that spillover effects of expansionary fiscal shocks are not uniform across countries, though for all three countries they result in economically significant GDP increases in the short run. In addition, government spending shocks have larger effects than net tax shocks. Altogether, the results support the idea that some countries may benefit significantly from expansionary U.S. fiscal policy. Copyright Springer Science+Business Media New York 2015

Keywords: Fiscal policy; International transmission; Spillovers; VAR models; Sign restriction; C32; E62; F42 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11079-015-9364-x

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