Keynesian government spending multipliers and spillovers in the euro area

Cwik, Tobias J.; Wieland, Volker

doi:10.1111/j.1468-0327.2011.00268.x

Cited by 123 publications

(95 citation statements)

References 67 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…While a consensus on positive short term effects of fiscal stimuli seems to have emerged (see Corsetti, Meier and Mueller, 2009;Cwik and Wieland, 2010;Coenen, Straub and Trabandt, 2011), there is evidence casting doubt on the conclusion that by symmetry, austerity in the presence of high debt levels has contractionary effects (Alesina and Ardagna, 2010;Cochrane, 2011;Corsetti et al, 2011). Earlier research on episodes of fiscal austerity found mixed evidence but emphasized the possibility of favourable outcomes (see Alesina and Drazen, 1991;Bertola and Drazen, 1991).…”

Section: Fiscal Policy: From Rules To Discretionmentioning

confidence: 98%

Reparations, Deficits, and Debt Default: The Great Depression in Germany

Ritschl¹

2013

The Great Depression of the 1930s

View full text Add to dashboard Cite

Section: Fiscal Policy: From Rules To Discretionmentioning

confidence: 98%

Reparations, Deficits, and Debt Default: The Great Depression in Germany

Ritschl¹

2013

The Great Depression of the 1930s

View full text Add to dashboard Cite

“…A number of recent studies have indicated a sharp decline in spending and tax multipliers stemming from the recent financial crisis, providing some merit to crowding out effects (IMF, 2008;Égert, 2010;Wieland, 2010). Other studies seem to support prevalence of positive effects of fiscal spending on output in spite of the decline in the value of fiscal multipliers during the recent crisis (Cwik/Wieland, 2009;Corsetti, et al, 2009). Current econometric models for the U.S. estimate that a tax cut has a multiplier effect of about 1.0, while the multiplier effect for government spending is 1.6 after about 18 months (Romer, 2009).…”

Section: Literature Survey On Causal Interactions Between Macroecomentioning

confidence: 99%

Sovereign Default Risk in the Euro-Periphery and the Euro-Candidate Countries

Gabrisch¹,

Orłowski

Pusch³

2012

SSRN Journal

View full text Add to dashboard Cite

Abstract:This study examines the key drivers of sovereign default risk in five euro area periphery countries and three euro-candidates that are currently pursuing independent monetary policies. We argue that the recent proliferation of sovereign risk premiums stems from both domestic and international sources. We focus on contagion effects of external financial crisis on sovereign risk premiums in these countries, arguing that the countries with weak fundamentals and fragile financial institutions are particularly vulnerable to such effects. The domestic fiscal vulnerabilities include: economic recession, less efficient government spending and a rising public debt. External 'push' factors entail increasing liquidity-and counter-party risks in international banking, as well as risk-hedging appetites of international investors embedded in local currency depreciation against the US Dollar. We develop a model capturing the internal and external determinants of sovereign risk premiums and test for the examined country groups. The results lead us to caution against premature fiscal consolidation in the aftermath of the global economic crisis, since such policy might actually worsen sovereign default risk. The model works well for the euro-periphery countries; it is less robust for the euro-candidates that upon a future euro adoption will have to pursue real economy growth oriented policies in order to mitigate a potential increase in sovereign default risk.

show abstract

“…6 In a monetary union that is open to the rest of the world, the inverse transmission is likely to involve the external exchange rate of the union, as pointed out above. Cwik/Wieland (2011) found this transmission channel at work in the euro area.…”

mentioning

confidence: 99%

On the Logic of Fiscal Policy Coordination in a Monetary Union

Landmann

2017

Open Econ Rev

View full text Add to dashboard Cite

Fiscal policies have been widely criticized for their failure to act as a stabilizing countercyclical force in the European Monetary Union (EMU) prior to the Financial Crisis of 2008, and even more so thereafter. Motivated by EMU experience, this paper lays out a parsimonious model of fiscal-monetary policy interaction between national fiscal authorities and a common central bank. It is well known that the structure of this interaction changes fundamentally when the central bank is constrained by a binding zero lower bound on the interest rate. The key result of this paper is that decentralized fiscal policies suffer from a systematic procyclical bias in a monetary union, both when the zero lower bound bites and when it does not. Whereas the existing literature on fiscal policy coordination knows "locomotive games" and "discipline games", in which fiscal policies are too tight or too loose, respectively, the analysis in this paper identifies a "stabilization game" in which coordination can play a useful role by strengthening the countercyclical thrust of fiscal policies. JEL Classification: E5, E6, F41, F42

show abstract

Keynesian government spending multipliers and spillovers in the euro area

Abstract: 4Non-technical summary 5

Cited by 123 publications

References 67 publications

Reparations, Deficits, and Debt Default: The Great Depression in Germany

Reparations, Deficits, and Debt Default: The Great Depression in Germany

Sovereign Default Risk in the Euro-Periphery and the Euro-Candidate Countries

On the Logic of Fiscal Policy Coordination in a Monetary Union

Contact Info

Product

Resources

About