Contrazione fiscale e crescita della produzione: il ruolo del settore estero e dei tassi di interes¬se nel caso dell’Irlanda - Fiscal contraction and output expansion: the role of the foreign sector and interest rates in the case of Ireland

Valeria De Bonis

Economia Internazionale / International Economics, 1997, vol. 50, issue 3, 361-373

Abstract: The fiscal contraction undertaken in Ireland in the late 80’s has received attention in the literature since it was followed by an expansion of aggregate demand and production. This has been considered an effect of the expectations of a lower future tax burden, which boosted private consumption. This paper analyses the outcome from a different perspective, suggesting that the decrease in interest rates and the increase in foreign demand played a central role in the rise in private demand. The “consumption puzzle” found in previous studies can actually be explained to a large extent by the unanticipated changes in interest rates and international competiveness.

JEL-codes: E60 F30 H30 (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0328

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