An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output

Olivier Blanchard and Roberto Perotti

The Quarterly Journal of Economics, 2002, vol. 117, issue 4, 1329-1368

Abstract: This paper characterizes the dynamic effects of shocks in government spending and taxes on U. S. activity in the postwar period. It does so by using a mixed structural VAR/event study approach. Identification is achieved by using institutional information about the tax and transfer systems to identify the automatic response of taxes and spending to activity, and, by implication, to infer fiscal shocks. The results consistently show positive government spending shocks as having a positive effect on output, and positive tax shocks as having a negative effect. One result has a distinctly nonstandard flavor: both increases in taxes and increases in government spending have a strong negative effect on investment spending.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (2691)

Downloads: (external link)
http://hdl.handle.net/10.1162/003355302320935043 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:117:y:2002:i:4:p:1329-1368.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().