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Empirical Investigation of Fiscal Policy Shocks in the UK

Kamal, Mona (2010): Empirical Investigation of Fiscal Policy Shocks in the UK. Published in: The Empirical Economics Letters , Vol. Volume, No. Number 4

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Abstract

This article examines fiscal policy shocks in the UK through using a Bayesian Vector Autoregression (BVAR) model which applies Mountford and Uhlig (2009) type sign-restriction. It investigates the impact of three fiscal policy experiments on macroeconomic variable. Specifically, the Deficit-Financed Spending Increase (DFSI), the Deficit-Financed Tax Cut (DFTC), and the Balanced-Budget Spending Increase (BBSI). The results show that, the policy conclusion differs according to the period under investigation.

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