Estimation of the fiscal impact multiplier in reduced-form equations.

Belliveau, Stefan (2012): Estimation of the fiscal impact multiplier in reduced-form equations.

Abstract

A simple approach to identify the influence of the federal government's consumption expenditures on economic activity using reduced-form equations is clearly presented and examined, using annual US data from 1929-2011. The conclusion from this analysis is that estimates from reduced-form equations can inform policy decision making.

• Item Type: MPRA Paper
• Language: English
• Keywords: Business cycles; fiscal policy
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles

References

Andersen, Leonall C. and Jerry L. Jordan. 1968. “Monetary and fiscal actions: A test of their relative importance in economic stabilization.” Federal Reserve Bank of St. Louis Review 50 (November): 11-24.

Ball, Lawrence, N. Gregory Mankiw and David Romer. 1988. “The New Keynesian Economics and the Output-Inflation Trade-off”, in New Keynesian Economics, Volume 1, Mankiw,N. Gregory and David Romer, eds. Cambridge, Mass. : MIT Press (1991).

Coenen, Günter, Christopher J. Erceg, Charles Freedman, Davide Furceri, Michael Kumhof, René Lalonde, Douglas Laxton, Jesper Lindé, Annabelle Mourougane, Dirk Muir, Susanna Mursula, Carolos de Resende, John Roberts, Werner Roeger, Stephen Snudden, Mathias Trabandt and Jan In't Veld. 2012. “Effects of Stimulus in Structural Models.” American Economic Journal: Macroeconomics 4 (January): 22-68.

Greene, William H. “Econometric Analysis.” 3rd edition. Upper Saddle River, N.J. : Prentice Hall (1997).

Meyer, Lawrence H. and Robert H. Rasche. 1980. “Empirical Evidence on the Effects of Stabilization Policy”, in Proceedings of the Fourth Annual Economic Policy Conference of the Federal Reserve Bank of St. Louis. Federal Reserve Bank of St. Louis Review 62 (April): 41-102.

(Ramey, Valerie A. 2011. “Identifying Government Spending Shocks: It’s All in the Timing.” Quarterly Journal of Economics 126 (February): 1-50. )

Romer, Christina D. “What do we know about the effects of fiscal policy? Separating evidence from ideology.” Hamilton College, N.Y. : Published remarks (7 November 2011).

Temin, Peter. “Did Monetary Forces Cause the Great Depression?” New York: Norton (1976).

Temin, Peter. 1998. “The Causes of American Business Cycles: An Essay in Economic Historiography.” National Bureau of Economic Research Working Paper 6692.

Thornton, Daniel L. 1984. “Monetizing the Debt.” Federal Reserve Bank of St. Louis Review 66 (December): 30-43.

Venables, William N. and Brian D. Ripley. “Modern Applied Statistics with S.” 4th edition. New York: Springer (2002).