Aggregate Effects of Budget Stimulus: Evidence from the Large Fiscal Expansions Database

Jérémie Cohen-Setton (), Egor Gornostay () and Colombe Ladreit
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Egor Gornostay: Peterson Institute for International Economics

No WP19-12, Working Paper Series from Peterson Institute for International Economics

Abstract: This paper estimates the effects of fiscal stimulus on economic activity using a novel database on large fiscal expansions for 17 OECD countries for the period 1960-2006. The database is constructed by combining the statistical approach to identifying large shifts in fiscal policy with narrative evidence from contemporaneous policy documents. When correctly identified, large fiscal stimulus packages are found to have strong and persistent expansionary effects on economic activity, with a multiplier of 1 or above. The effects of stimulus are largest in slumps and smallest in booms.

Keywords: Fiscal Policy; Public Economics; Public Finance; Tax Elasticities; National Government Expenditure; National Budget; Macroeconomic Policy; Stabilization; Macroeconomic History (search for similar items in EconPapers)
JEL-codes: E6 H3 H5 H6 N1 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-his and nep-mac
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:iie:wpaper:wp19-12

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