6533b7d8fe1ef96bd126b531
RESEARCH PRODUCT
Fiscal Policy Discretion, Private Spending, and Crisis Episodes
Ricardo M. SousaDavide FurceriDavide FurceriLuca Agnellosubject
Stimulus (economics)media_common.quotation_subjectDebtSustainabilityMonetary economicsTake overBusinessDiscretionFiscal unionCrowding outmedia_commonFiscal policydescription
In this paper, we assess the impact of fiscal policy discretion on economic activity in the short and medium-term. Using a panel of 132 countries from 1960 to 2008, we find that fiscal policy discretion provides a net stimulus to the economy in the short-run and crowding-in effects are amplified once crisis episodes are controlled for– in particular, banking crises - giving a great scope for fiscal policy stimulus packages. However, crowding-out effects take over in the long-run – especially, in the case of debt crises -, in line with the concerns about long-term debt sustainability.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2011-01-01 | SSRN Electronic Journal |