Identifying Fiscal Policy (in)effectiveness From The Differential Counter-cyclicality Of Government Spending In The Interwar Period

Nicolas-Guillaume Martineau () and Gregor Smith

No 1290, Working Paper from Economics Department, Queen's University

Abstract: Differences across decades in the counter-cyclical stance of fiscal policy can identify whether the growth in government spending affects output growth and so speeds recovery from arecession. We study government-spending reaction functions from the 1920s and 1930s for twenty countries. There are two main findings. First, surprisingly, government spending was less counter-cyclical in the 1930s than in the 1920s. Second, the growth of government spending did not have a significant effect on output growth, so that there is little evidencethat this feature of fiscal policy played a stabilizing role in the interwar period.

Keywords: fiscal policy; business-cycle history; Great Depression; interwar period (search for similar items in EconPapers)
JEL-codes: E32 E65 N10 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-05
New Economics Papers: this item is included in nep-fdg, nep-his and nep-mac
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Citations: View citations in EconPapers (1)

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https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1290.pdf First version 2014 (application/pdf)

Related works:
Journal Article: Identifying fiscal policy (in)effectiveness from the differential counter-cyclicality of government spending in the interwar period (2015)
Journal Article: Identifying fiscal policy (in)effectiveness from the differential counter‐cyclicality of government spending in the interwar period (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1290

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