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Uncertain Fiscal Consolidations

Huixin Bi (), Eric Leeper () and Campbell Leith ()

Staff Working Papers from Bank of Canada

Abstract: The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt, and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary or successful in stabilizing government debt. We argue that the conditions that could render fiscal consolidation efforts expansionary are unlikely to apply in the current economic environment.

Keywords: Economic models; Fiscal Policy; Uncertainty and monetary policy (search for similar items in EconPapers)
JEL-codes: H60 E62 E63 H30 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2013
New Economics Papers: this item is included in nep-pbe
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Journal Article: Uncertain Fiscal Consolidations (2013) Downloads
Working Paper: Uncertain Fiscal Consolidations (2012) Downloads
Working Paper: Uncertain Fiscal Consolidations (2012) Downloads
Working Paper: Uncertain Fiscal Consolidations (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:13-26

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