scholarly journals Planned Fiscal Consolidations and Growth Forecast Errors -- New Panel Evidence on Fiscal Multipliers

2015 ◽  
Author(s):  
Ansgar Hubertus Belke ◽  
Dominik Kronen ◽  
Thomas Ulrich Osowski
Keyword(s):  
Forecast Errors ◽  
Fiscal Multipliers ◽  
Fiscal Consolidations

scholarly journals Planned Fiscal Consolidations and Growth Forecast Errors – New Panel Evidence on Fiscal Multipliers

2015 ◽  
Vol 66 (1) ◽  
pp. 47-70
Author(s):  
Ansgar Belke ◽  
Dominik Kronen ◽  
Thomas Osowski
Keyword(s):  
Fiscal Policy ◽  
Cross Section ◽  
Fixed Effects ◽  
Gdp Growth ◽  
Forecast Errors ◽  
Learning Effects ◽  
Fiscal Consolidation ◽  
Fiscal Multipliers ◽  
Fiscal Consolidations ◽  
Over Time

Abstract This paper analyzes the effect of planned fiscal consolidation on GDP growth forecast errors from the years 2010-2013 using cross section analyses and fixed effects estimations. Our main findings are that fiscal multipliers have been underestimated in most instances for the year 2011 while we find little to no evidence for the years 2010 and especially the latter years 2012/13. Since the underestimation of fiscal multipliers seems to have decreased over time, it may indicate learning effects of forecasters. However, the implications for fiscal policy should be considered with caution as a false forecast of fiscal multipliers does not confirm that austerity is the wrong fiscal approach but only suggests a too optimistic assessment of fiscal multipliers for the year 2011.

scholarly journals Growth Forecast Errors and Fiscal Multipliers

2013 ◽  
Vol 13 (1) ◽  
pp. 1 ◽  
Author(s):  
Olivier Blanchard ◽  
Daniel Leigh ◽  
◽  
Keyword(s):  
Forecast Errors ◽  
Fiscal Multipliers

Learning about Fiscal Multipliers from Growth Forecast Errors

2014 ◽  
Vol 62 (2) ◽  
pp. 179-212 ◽  
Author(s):  
Olivier J Blanchard ◽  
Daniel Leigh
Keyword(s):  
Forecast Errors ◽  
Fiscal Multipliers

What Do We Know about the Effects of Austerity?

2018 ◽  
Vol 108 ◽  
pp. 524-530 ◽  
Author(s):  
Alberto Alesina ◽  
Carlo A. Favero ◽  
Francesco Giavazzi
Keyword(s):  
Fiscal Policy ◽  
Fiscal Multipliers ◽  
Fiscal Consolidations

The literature on fiscal multipliers is far from having reached an agreed upon conclusion. One result, however, seems very robust: in OECD economies, fiscal consolidations based upon expenditure cuts are much less costly than those performed on the tax side. The purpose of this paper is twofold. First, we review recent evidence which considers multi-year fiscal plans. Analyzing multi-year plans is a better way of studying the effects of fiscal policy because governments typically adopt multi-year budget laws. Second, we illustrate alternative theoretical explanations for our findings and we discuss which ones seem more appropriate in different cases.

scholarly journals Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?

2019 ◽  
Vol 33 (2) ◽  
pp. 89-114 ◽  
Author(s):  
Valerie A. Ramey
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Narrow Range ◽  
The United States ◽  
Fiscal Multipliers ◽  
Fiscal Consolidations

This paper takes stock of what we have learned from the “Renaissance” in fiscal research in the ten years since the financial crisis. I first discuss the new innovations in methodology and various strengths and weaknesses of the main approaches to estimating fiscal multipliers. Reviewing the estimates, I come to the surprising conclusion that the bulk of the estimates for average spending and tax change multipliers lie in a fairly narrow range, 0.6 to 1 for spending multipliers and -2 to -3 for tax change multipliers. However, I identify economic circumstances in which multipliers lie outside those ranges. Finally, I review the debate on whether multipliers were higher for the 2009 Obama stimulus spending in the United States or for fiscal consolidations in Europe.

scholarly journals Growth Forecast Errors and Fiscal Multipliers

2013 ◽  
Author(s):  
Olivier Blanchard ◽  
Daniel Leigh
Keyword(s):  
Forecast Errors ◽  
Fiscal Multipliers

scholarly journals Growth Forecast Errors and Fiscal Multipliers

2013 ◽  
Author(s):  
Olivier J. Blanchard ◽  
Daniel Leigh
Keyword(s):  
Forecast Errors ◽  
Fiscal Multipliers

scholarly journals Growth Forecast Errors and Fiscal Multipliers

2013 ◽  
Vol 103 (3) ◽  
pp. 117-120 ◽  
Author(s):  
Olivier J Blanchard ◽  
Daniel Leigh
Keyword(s):  
Early Years ◽  
Forecast Errors ◽  
Fiscal Consolidation ◽  
Lower Growth ◽  
Fiscal Multipliers ◽  
Advanced Economies

This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected. The relation is particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may in part reflect learning by forecasters and in part smaller multipliers than in the early years of the crisis.

scholarly journals Fiscal austerity in emerging market economies

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Chetan Dave ◽  
Chetan Ghate ◽  
Pawan Gopalakrishnan ◽  
Suchismita Tarafdar
Keyword(s):  
Open Economy ◽  
Private Consumption ◽  
Emerging Market ◽  
Small Open Economy ◽  
Emerging Market Economies ◽  
Fiscal Multipliers ◽  
Market Economies ◽  
World Economic ◽  
Fiscal Consolidations ◽  
Fiscal Austerity

AbstractWe build a small open economy RBC model with financial frictions to analyse spending and tax based fiscal consolidations in emerging market economies (EMEs). We show that if government spending is a substitute to private consumption in household utility, a spending based fiscal consolidation has an expansionary effect on output. In contrast, tax based consolidations are always contractionary irrespective of the strength of substitutability between government and private consumption. Our findings support the results in the World Economic Outlook (2010), USA: International Monetary Fund, that tax based consolidation measures are more costly (in terms of GDP losses) than spending based consolidations. We calibrate the model to India and calculate the fiscal multipliers associated with spending and tax based fiscal consolidations. Our paper identifies new mechanisms that underlie the dynamics of fiscal reforms and their implications for successful fiscal consolidations.

Russia’s fiscal stimulus and fiscal sustainability

2013 ◽  
pp. 90-108 ◽  
Author(s):  
N. Akindinova ◽  
N. Kondrashov ◽  
A. Cherniavsky
Keyword(s):  
Government Spending ◽  
Public Expenditure ◽  
Oil Prices ◽  
Fiscal Sustainability ◽  
Macroeconomic Model ◽  
Sharp Drop ◽  
Fiscal Stimulus ◽  
Fiscal Multipliers ◽  
Russian Economy ◽  
The Impact

This study examines the impact of public expenditure on economic growth in Russia. Fiscal multipliers for various items of government spending are calculated by means of our macroeconomic model of the Russian economy. Resources for fiscal stimulus and optimization are analyzed. In this study we assess Russia’s fiscal sustainability in conditions of various levels of oil prices. We conclude that fiscal stimulus is ineffective in Russia, while fiscal sustainability in conditions of a sharp drop in oil prices is relatively low.

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