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Asymmetric Effects Of Government Spending
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Book Synopsis Asymmetric Effects of Government Spending by : Michael B. Devereux
Download or read book Asymmetric Effects of Government Spending written by Michael B. Devereux and published by INTERNATIONAL MONETARY FUND. This book was released on 2005-01-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically explores how fiscal policy (represented by increases in government spending) has asymmetric effects on economic activity at different levels of real interest rates. It suggests that the effect of fiscal policy depends on the level of real rates, since the Ricardian effect is smaller at lower financing costs of fiscal policy. Using threshold regression models on U.S. data, the paper provides new evidence that expansionary government spending is more conducive to short-run growth when real rates are low. It also finds asymmetric effects on interest rates and inflation, and threshold effects associated with substitution between financing methods.
Book Synopsis The Asymmetric Effects of Government Spending Shocks by : Hakan Berument
Download or read book The Asymmetric Effects of Government Spending Shocks written by Hakan Berument and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this paper is to assess if expansionary and contractionary government spending shocks have an asymmetric effect for Turkish economy. Keynesian theory suggests that increase in government spending stimulate aggregate demand and increases output. However, there might be asymmetry for the effect of fiscal policy on economic outcome due to stickiness of prices, perception of changes (permanent versus transitory) and nearness to full employment. This paper assesses this asymmetry for Turkey by using quarterly data from 1987:I to 2001:I. The empirical evidence reported here reveals that private consumption and investment decrease in the face of expansionary government spending shocks; however, they either do not change or decrease very little under contractionary government spending shocks.
Book Synopsis Asymmetric Growth Impact of Fiscal Policy by : Hany Abdel-Latif
Download or read book Asymmetric Growth Impact of Fiscal Policy written by Hany Abdel-Latif and published by . This book was released on 2018 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically explores how fiscal policy - represented by changes in government spending- exerts asymmetric effects on economic growth in the context of a developing country, Egypt in particular. By allowing for the theoretical plausibility of asymmetric effects of fiscal policy on economic activity, our research suggests that nothing can guarantee linearity between the growth impact of increasing and decreasing government expenditures. Using a non-linear ARDL model on Egypt data - at both aggregated and disaggregated levels- for the period 1980-2013, this paper provides new evidence of a non-linear relationship between government spending and economic growth.
Book Synopsis Fiscal Shocks and Asymmetric Effects by : Ioannis Pragidis
Download or read book Fiscal Shocks and Asymmetric Effects written by Ioannis Pragidis and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically test the effects of unanticipated fiscal policy shocks on the growth rate and the cyclical component of real private output and reveal different types of asymmetries in fiscal policy implementation. The data used are quarterly U.S. observations over the period 1967:1 to 2011:4. In doing so, we use both a vector autoregressive and the novel support vector machines systems in order to extract the fiscal policy shocks series. The latter has never been used before in a similar macroeconomic setting. Within our research framework, in order to test the robustness of our results to alternative aggregate money supply definitions we use two alternative moentary aggregates. These are the commonly reported by central banks and policy makers simple sum monetary aggregates at the MZM level of aggregation and the alternative CFS Divisia MZM aggregate. From each of these four systems we extracted four types of shocks: a negative and a positive government spending shock and a negative and a positive government revenue shock. These eight different types of unanticipated fiscal policy shocks are next used to empirically examine their effects on the growth rate and the cyclical component of real private GNP in two sets of regressions: one that assumes only contemporaneous effects of the shocks on output and one that is augmented with four lags of each fiscal shock.
Book Synopsis Stimulus Versus Austerity by : Régis Barnichon
Download or read book Stimulus Versus Austerity written by Régis Barnichon and published by . This book was released on 2015 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite intense scrutiny estimates of the government spending multiplier remain highly uncertain with values ranging from 0.5 to 2. While a fiscal consolidation is generally assumed to have the same (mirror-image) effect as a fiscal expansion, we show that relaxing this assumption is crucial to understanding the effects of fiscal policy. The government spending multiplier is substantially below 1 for fiscal expansions, but the multiplier is substantially above 1 for fiscal consolidations.
Book Synopsis Asymmetric Effects of Government Spending by : Woon Gyu Choi
Download or read book Asymmetric Effects of Government Spending written by Woon Gyu Choi and published by . This book was released on 2005 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Do Government Spending Multipliers Depend on the Sign of the Shock? by : Nadav Ben Zeev
Download or read book Do Government Spending Multipliers Depend on the Sign of the Shock? written by Nadav Ben Zeev and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze whether government spending multipliers differ by the sign of the shock. Using aggregate historical U.S. data, we apply Ben Zeev's (2020) nonlinear diagnostic tests and find evidence of nonlinearities in the impulse response functions of both government spending and GDP. We then extend Ramey and Zubairy's (2018) framework to allow for asymmetric effects as a type of state dependence to estimate multipliers. While we find differences in the impulse response functions, the resulting multipliers do not differ by sign of the shock. Thus, we find no evidence of asymmetry of government spending multipliers.
Book Synopsis Economic Impact of Government Spending by : Richard K. Vedder
Download or read book Economic Impact of Government Spending written by Richard K. Vedder and published by . This book was released on 1993 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Worst of Both Worlds by : Benjamin Born
Download or read book The Worst of Both Worlds written by Benjamin Born and published by . This book was released on 2019 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under fixed exchange rates, fiscal policy is an effective tool. According to classical views because it impacts the real exchange rate, according to Keynesian views because it impacts output. Both views have merit because the effects of government spending are asymmetric. A spending cut lowers output but does not alter the real exchange rate. A spending increase appreciates the exchange rate but does not alter output unless there is economic slack. We establish these results in a small open economy model with downward nominal wage rigidity and provide empirical evidence on the basis of quarterly time-series data for 38 countries.
Book Synopsis Boom-Bust Cycle, Asymmetrical Fiscal Response and the Dutch Disease by : Rabah Arezki
Download or read book Boom-Bust Cycle, Asymmetrical Fiscal Response and the Dutch Disease written by Rabah Arezki and published by . This book was released on 2014 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the behavior of expenditure policy during boom-bust in commodity price cycles, and its implication for real exchange rate movements. To do so, we introduce a Dutch disease model with downward rigidities in government spending to revenue shock. This model leads to a decoupling between real exchange rate and commodity price movement during busts. We test our model's theoretical predictions and underlying assumptions using panel data for 32 oil-producing countries over the period 1992 to 2009. Results are threefold. First, we find that change in current spending have a stronger impact on the change in real exchange rate compared to capital spending. Second, we find that current spending is downwardly sticky, but increases in boom time, and conversely for capital spending. Third, we find limited evidence that fiscal rules have helped reduce the degree of responsiveness of current spending during booms. In contrast, we find evidence that fiscal rules are associated with a significant reduction in capital expenditure during busts while responsiveness to boosts is more muted. This raises concerns about potential adverse consequences of this asymmetry on economic performance in oil-producing countries.
Book Synopsis Essays on Nonlinearities and Structural Breaks in the Relationships Between Macroeconomic Variables by : Irina Blagoja Panovska
Download or read book Essays on Nonlinearities and Structural Breaks in the Relationships Between Macroeconomic Variables written by Irina Blagoja Panovska and published by . This book was released on 2013 with total page 126 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dissertation is set out in three chapters, focusing on the structural changes that led to jobless recoveries in following the past three recessions, the asymmetric effects of fiscal stimulus over the business cycle, and the asymmetric effects of fiscal cuts and stimulus respectively. In the first chapter, I examine the three leading theoretical explanations for the recent jobless recoveries using a correlated unobserved components model of aggregate data for output, sales, employment, and hours. The main finding is that employment now respond to demand shocks in a way that is consistent with just-in-time utilization of labor resources. The second and the third chapter focus on asymmetric responses to fiscal policy. In the second chapter, I investigate the effects of government spending on U.S. economic activity using a threshold version of a structural vector autoregressive model. The empirical findings support state-dependent effects of fiscal policy. In particular, the effects of a government spending shock on output are significantly larger and more persistent when the economy has a high degree of underutilized resources than when the economy is close to capacity. The third chapter examines whether there are sign and size asymmetries in the responses of output, output components, and employment to fiscal policy. When the economy is not constrained, a large fiscal stimulus is more effective at increasing employment and output, and cuts have larger effects than increases.
Book Synopsis Government Size and Economic Growth by : Richard K. Vedder
Download or read book Government Size and Economic Growth written by Richard K. Vedder and published by . This book was released on 1998 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Fiscal Policy after the Financial Crisis by : Alberto Alesina
Download or read book Fiscal Policy after the Financial Crisis written by Alberto Alesina and published by University of Chicago Press. This book was released on 2013-06-25 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth. Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty over the sustainability of recent economic policies, further contributions to this volume discuss the merits of alternate means of debt reduction through decreased government spending or increased taxes. A final section examines how the short-term political forces driving fiscal policy might be balanced with aspects of the long-term planning governing monetary policy. A direct intervention in timely debates, Fiscal Policy after the Financial Crisis offers invaluable insights about various responses to the recent financial crisis.
Book Synopsis Non-Linear Effect of Government Spending on Private Consumption in Cambodia by : Leanghak Hok
Download or read book Non-Linear Effect of Government Spending on Private Consumption in Cambodia written by Leanghak Hok and published by . This book was released on 2020 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: The influence of government expenditure on private consumption has been debated among scholars. Some studies have found a positive linkage between the two while some others have found a negative one. In this study, the Markov-Switching Autoregressive (MSAR) model was used to investigate the non-linear impact of government spending on private consumption in Cambodia. The result based on Cambodia's annual data from 1987 to 2015 shows that private consumption responds positively to a rise in disposable income or a decline in saving interest rates. Inflation is statistically insignificant. The impact of government purchases on private consumption is linear, negative, and asymmetric. A non-linear effect of government investment on household consumption occurs in Cambodia during certain periods--times of political instability, which are 1994-1995, 1997-1998, and 2004-2006. This non-Keynesian effect during the period 2010-2015 occurs because of raising the present value of taxes. The contribution of the study is that an increase in the present value of taxes and political instability can prevent the efficacy of government spending on private consumption.
Book Synopsis Inflation Dynamics and Monetary Policy Transmission in Vietnam and Emerging Asia by : Ms.Rina Bhattacharya
Download or read book Inflation Dynamics and Monetary Policy Transmission in Vietnam and Emerging Asia written by Ms.Rina Bhattacharya and published by International Monetary Fund. This book was released on 2013-07-03 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an overview of inflation developments in Vietnam in the years following the doi moi reforms, and uses empirical analysis to answer two key questions: (i) what are the key drivers of inflation in Vietnam, and what role does monetary policy play? and (ii) why has inflation in Vietnam been persistently higher than in most other emerging market economies in the region? It focuses on understanding the monetary policy transmission mechanism in Vietnam, and in understanding the extent to which monetary policy can explain why inflation in Vietnam has been higher than in other Asian emerging markets over the past decade.
Book Synopsis How Big (Small?) are Fiscal Multipliers? by : Ethan Ilzetzki
Download or read book How Big (Small?) are Fiscal Multipliers? written by Ethan Ilzetzki and published by International Monetary Fund. This book was released on 2011-03-01 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero.
Book Synopsis Macroeconomic Policy by : Robert J. Barro
Download or read book Macroeconomic Policy written by Robert J. Barro and published by Harvard University Press. This book was released on 1990 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is a collection of 13 papers by a leading proponent of new classical macroeconomics, published between 1981 and 1989. The papers are classified into three topical groups. The five papers in the first section, "Rules versus Discretion," provide an overview of the models and ideas that have been deployed in this policy debate. The next three papers investigate the impact of changes in the money supply on business cycles. The third category contains five papers that address various issues in fiscal policy. Of particular note is Barro's 1989 paper on the resuscitation of the Ricardian equivalence theorem. ISBN 0-674-54080-8: $37.50.
