Fiscal and Monetary Policy During Downturns : Evidence from the G7.
Title:
Fiscal and Monetary Policy During Downturns : Evidence from the G7.
Author:
Stehn, Sven Jari.
ISBN:
9781451916331
Personal Author:
Physical Description:
1 online resource (23 pages)
Series:
IMF Working Papers
Contents:
Contents -- I. Inroduction and Summary -- II. Event-Study Analysis -- A. Data and Methodology -- B. Results -- III. Vector-Autoregression (VAR) Analysis -- A. Methodology -- B. Baseline Results -- C. Asymmetry -- D. Policy in Real Time -- IV. Case Study: Have U.S. Tax Cuts Been Timely and Temporary? -- V. Conclusion -- Tables -- 1. How Often and Quickly did Fiscal Stimulus Arriva During Downturns? -- 2. How Often and Quickly did Fiscal Stimulus Arrive During Upturns? -- 3. How Reliable are Preliminary Growth Estimates? -- 4. Legislated Tax Changes During Downturns -- 5. Summary of Countercyclical Tax Changes -- Figures -- 1. How Strongly do Fiscal and Monetary Policy Respond? -- 2. How does the Response Vary Across Fiscal Instruments and G7 Members? -- 3. How Robust is the Response to the Cyclical Indicator? -- 4. Is There a Bias Towards Easing in Downturn? -- 5. Errors in Identifying Negative Growth in the G7 -- 6. Has Policy Erroneously Responded to Perceived Growth Shocks? -- References.
Abstract:
This paper analyzes how fiscal and monetary policy typically respond during downturns in G7 countries. It evaluates whether discretionary fiscal responses to downturns are timely and temporary, and compares the response of fiscal policy to that of monetary policy. The results suggest that while responding more weakly and less quickly than monetary policy, discretionary fiscal policy is more timely than conventional wisdom would suggest, particularly in "Anglo-Saxon" countries, but the response differs substantially across fiscal instruments. Both fiscal and monetary policy are found to be subject to an easing bias, with more easing during downturns than tightening during upturns; and liable to easing in response to erroneously perceived downturns, many of which are subsequently revised to expansions.
Local Note:
Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2017. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.
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