Estimating the effects of fiscal policy in OECD countries

Roberto Perotti
Additional contact information
Roberto Perotti: European University Institute and Centre for Economic Policy Research

No 15, Economics Working Papers from European Network of Economic Policy Research Institutes

Abstract: This paper studies the effects of fiscal policy on GDP, prices and interest rates in 5 OECD countries, using a structural Vector Autoregression approach. Its main results can be summarized as follows: 1) The estimated effects of fiscal policy on GDP tend to be small: positive government spending multipliers larger than 1 tend to be the exception; 2) The effects of fiscal policy on GDP and its components have become substantially weaker over time; 3) Under plausible values of the price elasticity, government spending has positive effects on the price level, although usually small; 4) Government spending shocks have significant effects on the nominal and real short interest rate, but of varying signs; 5) In the post-1980 period, net tax shocks have positive short run effects on the nominal interest rate, and typically negative or zero effects on prices; 6) The US is an outlier in many dimensions; responses to fiscal shocks estimated on US data are often not representative of the average OECD country included in this sample.

Pages: 55 pages
Date: 2002-10
References: Add references at CitEc
Citations: View citations in EconPapers (156)

Downloads: (external link)
http://www.enepri.org/Publications/WP015.pdf (application/pdf)

Related works:
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:epr:enepwp:015

Ordering information: This working paper can be ordered from
ENEPRI c/o CEPS Place du Congrès 1 1000 Brussels Belgium
http://www.enepri.org

Access Statistics for this paper

More papers in Economics Working Papers from European Network of Economic Policy Research Institutes ENEPRI c/o CEPS Place du Congrès 1 1000 Brussels Belgium. Contact information at EDIRC.
Bibliographic data for series maintained by CEPS ( this e-mail address is bad, please contact ).