Fiscal Policy Regimes and Household Consumption

Kristian Jönsson

No 2004:12, Working Papers from Lund University, Department of Economics

Abstract: In this paper, we study the effects of fiscal policy during different fiscal policy regimes. More specifically, we investigate how different factors, such as size, duration and composition of fiscal changes, can alter the effects of fiscal policy on private consumption. Using an unbalanced panel of 19 OECD countries during the period 1960-2000, we find that transfer changes are believed to be permanent during fiscal contractions. Hence, it is more likely that an expansionary fiscal contraction will occur if the government cuts transfers. Our results highlight the importance of accounting for specific circumstances, such as the debt and deficit position, when studying expansionary fiscal contractions. The results also indicate that expansionary fiscal contractions are likely to come at a considerable social cost.

Keywords: Panel data; Household consumption; Fiscal policy; Non-Keynesian effects (search for similar items in EconPapers)
JEL-codes: C23 E21 E62 H31 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2004-03-25
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2004_012

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