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Fiscal Policy Innovations in Advanced Economies

Kwabena Meneabe Nkrumah
Authors registered in the RePEc Author Service: Kwabena Meneabe Ackon

MPRA Paper from University Library of Munich, Germany

Abstract: Unprecedented is a word that best describes the current state of advanced economies. Interest rates are low in many advanced countries and negative in a few others suggesting that monetary policy has lost its effectiveness. The economic policy tool that has not been implemented yet by many advanced economies is fiscal policy. This thesis studies the effect of fiscal policy in USA, UK and Germany and find positive effects of extra government purchases on output, inflation, private consumption, business investment and wages. As a contribution to the academic literature on fiscal policy, this thesis estimates the impact of automatic stabilisers on economic activity and finds it holds predictive content for the path of output and inflation with both showing a positive response. Furthermore, this thesis adds to the literature on state-dependence fiscal policy by using a novel econometric approach to study the effect of expansionary fiscal policy during recessions.

Keywords: Fiscal Policy; Government; Business Cycles. (search for similar items in EconPapers)
JEL-codes: E0 E02 E03 E4 O1 O16 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac
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Working Paper: Fiscal Policy Innovations In Advanced Economies (2020) Downloads
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