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Expansionary fiscal contractions? Evidence from panel data
Author(s)
Date Issued
2003-01
Date Available
2009-03-06T14:46:30Z
Abstract
We examine the ability of the Expansionary Fiscal Contraction (EFC) hypothesis to explain the performance of of OECD economies during times of crisis. We find some limited evidence in its favour: if public consumption is reduced in response to a fiscal crisis (as defined by a high level of debt), private consumption does seem to increase. However the size of the effect is smaller than that typically found in similar studies. Furthermore, the increase in private consumption is not usually sufficient to offset the direct
effect of a reduction in the public consumption on output fiscal contractions
are not literally expansionary.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP03/03
Copyright (Published Version)
UCD School of Economics 2003
Keywords
Classification
E21
E62
Subject – LCSH
Organisation for Economic Co-operation and Development
Fiscal policy
Saving and investment
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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