Quantitative Effects of Fiscal Foresight
Eric Leeper,
Alexander Richter and
Todd Walker
No 16363, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Changes in fiscal policy typically entail two kinds of lags: the legislative lag--between when legislation is proposed and when it is signed into law--and the implementation lag--from when a new fiscal law is enacted and when it takes effect. These lags imply that substantial time evolves between when news arrives about fiscal changes and when the changes actually take place--time when households and firms can adjust their behavior. We identify two types of fiscal news--government spending and changes in tax policy--and map the news processes into standard DSGE models. We identify news concerning taxes through the municipal bond market. If asset markets are efficient, the yield spread between tax-exempt municipal bonds and treasuries should be a function of the news concerning changes in tax policy. We identify news concerning government spending through the Survey of Professional Forecasters. We conclude that news concerning fiscal variables is a time-varying process that can have important qualitative and quantitative effects.
JEL-codes: E62 H2 H5 (search for similar items in EconPapers)
Date: 2010-09
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Published as Eric M. Leeper & Alexander W. Richter & Todd B. Walker, 2012. "Quantitative Effects of Fiscal Foresight," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 115-44, May.
Published as Quantitative Effects of Fiscal Foresight , Eric M. Leeper, Alexander W. Richter, Todd B. Walker. in Fiscal Policy (Trans-Atlantic Public Economics Seminar, TAPES) , Gordon and Perotti. 2012
Downloads: (external link)
http://www.nber.org/papers/w16363.pdf (application/pdf)
Related works:
Journal Article: Quantitative Effects of Fiscal Foresight (2012) 
Chapter: Quantitative Effects of Fiscal Foresight (2010)
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:nbr:nberwo:16363
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16363
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().