6533b874fe1ef96bd12d678c
RESEARCH PRODUCT
Fiscal policy discretion, private spending and crises episodes
Luca AgnelloDavide FurceriR. Sousasubject
Settore SECS-P/02 Politica EconomicaFiscal policy discretion GDP growth private consumption private investment crowding-in crowding-out.description
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 |