In search of the transmission mechanism of fiscal policy
By: Roberto Perotti.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13143.; Working paper series (National Bureau of Economic Research) -- working paper no. 13143.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 56
Subjects: Finance, Public -- OECD countries; Government spending policy -- OECD countries; Economic development -- Econometric models; Time-series analysis; War finance; OECD countries -- Economic policy
Description: "Most economists would agree that a hike in the federal funds rate will cause some slowdown in growth and inflation, and that the bulk of the empirical evidence is consistent with this statement. But perfectly reasonable economists can and do disagree even on the basic effects of a shock to government spending on goods and services: neoclassical models predict that private consumption and the real wage will fall, while some neo-keyenesian models predict the opposite. This paper discusses alternative time series methodologies to identify government spending shocks and to estimate their effects. Applying these methodologies to data from the US and three other OECD countries provides little evidence in favor of the neoclassical predictions. Using the US input-output tables, the paper then turns to industry-level evidence around two major military buildups to shed light on the effects of government spending shocks."--abstract.
Notes: "June 2007"

Includes bibliographical references (p. 37-40).

Also available in PDF from the NBER world wide web site (www.nber.org).