Munich Personal RePEc Archive

The Effects of Discretionary Fiscal Stimulus: A Survey

Hristov, Atanas (2012): The Effects of Discretionary Fiscal Stimulus: A Survey.

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Abstract

This paper surveys evidence on fiscal multipliers from the Euro area and the United States obtained by direct, cross-state or economywide measures of the effects of broad-based tax cuts and increases in government purchases. In view of the evidence in the literature I conclude that that fiscal policy may be substantially more effective when the proportion of households and firms that are liquidity constrained is high and when utilization of factors of production is low.

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