Fiscal policy and growth forecasts in the EU: are official forecasters still misestimating fiscal multipliers?

David Cronin () and Kieran McQuinn
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David Cronin: Central Bank of Ireland, and Economic and Social Research Institute (ESRI)

Review of World Economics (Weltwirtschaftliches Archiv), 2021, vol. 157, issue 3, No 1, 453-462

Abstract: Abstract Blanchard and Leigh (Am Econ Rev 103(3):117–120, 2013; IMF Econ Rev 62(2):179–212, 2014) find fiscal multipliers to be underestimated in the EU in the deep recession of the early 2010s. Using two 2013–2018 datasets for 26 EU member states, assembled from Stability and Convergence Programmes and the European Commission’s Spring Forecasts, this paper shows that multiplier estimates in the EU have been overestimated in the post-crisis period. Forecasters then are still not capturing accurately the impact that fiscal policy has on output growth rates and are misestimating in a manner opposite to that reported by Blanchard and Leigh.

Keywords: Fiscal policy; Multipliers; Forecast errors (search for similar items in EconPapers)
JEL-codes: C23 E62 H68 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10290-021-00428-z

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