Munich Personal RePEc Archive

Impacts of Fiscal Policy Shocks in Finland

Unal, Umut (2014): Impacts of Fiscal Policy Shocks in Finland. Published in: The Empirical Economics Letters , Vol. 9, No. 13 (1 September 2014): pp. 1017-1024.

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Abstract

This paper focuses on the responses of main macroeconomic indicators to the tax and spending shocks in Finland using a structural VAR approach. The results suggest that GDP increases in response to an increase in government spending whereas it falls in response to an increase in total net taxes. The response of investment to both government spending and total net tax shock is consistent with the Keynesian theory. The results also indicate that the relative impact of government spending on output is lower than that of total net taxes.

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