Author: Bijie JiaPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Government Spending Shocks and Private Activity
Author: Bijie JiaFiscal Policy after the Financial Crisis
Author: Alberto AlesinaPublisher: University of Chicago Press
ISBN: 022601844X
Category : Business & Economics
Languages : en
Pages : 596
Book Description
The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth. Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty over the sustainability of recent economic policies, further contributions to this volume discuss the merits of alternate means of debt reduction through decreased government spending or increased taxes. A final section examines how the short-term political forces driving fiscal policy might be balanced with aspects of the long-term planning governing monetary policy. A direct intervention in timely debates, Fiscal Policy after the Financial Crisis offers invaluable insights about various responses to the recent financial crisis.
Government Spending Shocks and Private Sector Innovation
Author: Ruchith DissanayakePublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Increases in defense spending - the largest portion of discretionary government spending in the U.S. - are negatively associated with private sector firm innovation measured using various patent-based proxies. A central finding in our study is that the extent to which government spending hinders firm innovation is dependent on a firm's cash flow sensitivity to consumer demand. In addition, we document that the negative effects of this mechanism are stronger for firms with low tangible collateral that rely on internal cash flow to finance innovation projects. The aggregate demand mechanism operates independently of the resource diversification and public debt crowding-out mechanisms documented in prior studies. Our results are robust to alternative measures of firm innovation and different estimation methodologies.
The Effectiveness of Fiscal Policy in Stimulating Economic Activity
Author: Richard HemmingPublisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 62
Book Description
This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.
Private Debt Overhang and the Government Spending Multiplier
Author: Marco BernardiniPublisher:
ISBN:
Category :
Languages : en
Pages : 43
Book Description
Using state-dependent local projection methods and historical U.S. data, we find that government spending multipliers are considerably larger in periods of private debt overhang. In particular, we find significant crowding-out of personal consumption and investment in low-debt states, resulting in multipliers that are significantly below one. Conversely, in periods of private debt overhang, there is a strong crowding-in effect, while multipliers are much larger than one. In high-debt states, more (less) government purchases also reduce (increase) the government debt-to-GDP ratio. These results are robust for the type of government spending shocks, and when we control for the business cycle, government debt overhang and the zero lower bound on the nominal interest rate. Our findings imply that spending multipliers were likely much larger than average during the Great Recession.
Handbook of Macroeconomics
Author: John B. TaylorPublisher: North Holland
ISBN:
Category : Business & Economics
Languages : en
Pages : 596
Book Description
This text aims to provide a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions.
Assessing the Impact of a Change in the Composition of Public Spending
Author: Ivan TchakarovPublisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 54
Book Description
Despite intense calls for safeguarding public investment in Europe, public investment expenditure, when measured in relation to GDP, has steadily fallen in the last three decades, evoking fears that economic activity may be correspondingly negatively affected. At the same time, however, public consumption in the EU-12 countries has trended up. In this paper, we provide a macroeconomic assessment of the observed change in the composition of public spending in the euro area in a medium-scale two-country dynamic stochastic general equilibrium (DSGE) model. First, we identify the channels through which both temporary and permanent public investment shocks generate larger fiscal multipliers than exogenous increases in public consumption. Second, we quantify the negative impact of a change in fiscal stance, characterized by a permanent rise in public consumption and a permanent fall in public investment, keeping the overall level of public spending constant. The key message of the paper is that calls for reversing the observed trend in the composition of public spending are well justified.
Government spending and private activity
Author: Valerie A. RameyPublisher:
ISBN:
Category : Economics
Languages : en
Pages : 49
Book Description
This paper asks whether increases in government spending stimulate private activity. The first part of the paper studies private spending. Using a variety of identification methods and samples, I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity. In order to determine whether concurrent increases in tax rates dampen the spending multiplier, I use two different methods to adjust for tax effects. Neither method suggests significant effects of current tax rate changes on the spending multiplier. In the second part of the paper, I explore the effects of government spending on labor markets. I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity.
Analysis of Different Types of Government Spending Shocks and Turkish Trilemma Configuration
Author: Orcan CortukWho Benefits from Increased Government Spending? A State-Level Analysis
Author: Michael OwyangPublisher:
ISBN:
Category :
Languages : en
Pages : 49
Book Description
We simultaneously identify two government spending shocks: military spending shocks as defined by Ramey (2008) and federal spending shocks as defined by Perotti (2008). We analyze the effect of these shocks on state-level personal income and employment. We find regional patterns in the manner in which both shocks affect state-level variables. Moreover, we find differences in the propagation mechanisms for military versus nonmilitary spending shocks. The former benefits economies with larger manufacturing and retail sectors and states that receive military contracts. While non-military shocks also benefit states with the proper industrial mix, they appear to stimulate economic activity in lower-income states.