Time varying fiscal policy in the U.S

Manuel Pereira and Artur Silva Lopes ()

No 1004, CEMAPRE Working Papers from Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon

Abstract: To investigate the time heterogeneity effects of fiscal policy in the U.S., we use a non-recursive, Blanchard and Perotti-like structural VAR with time-varying parameters, estimated through Bayesian simulation over the 1965:2-2009:2 period. Our evidence suggests that fiscal policy has lost some capacity to stimulate output but that this trend is more pronounced for taxes net of transfers than for government expenditure, whose effectiveness declines only slightly. Fiscal multipliers keep conventional signs throughout. An investigation of changes in fiscal policy conduct indicates an increase in the countercyclical activism of net taxes over time, which appears to have reached a maximum during the 2008-09 recession.

Keywords: Fiscal policy; Bayesian estimation; Structural change; Macroeconomic stabilization (search for similar items in EconPapers)
JEL-codes: C11 E32 E62 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-09
New Economics Papers: this item is included in nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Time-varying fiscal policy in the US (2014)
Working Paper: Time-varying fiscal policy in the U.S (2010)
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