Fiscal policy and growth
By: Dong Fu, Lori L. Taylor and Mine K. Yül.
Contributors: Taylor, Lori L.; Yücel, Mine K.
Series: Research Department working paper ;; 0301; Working paper (Federal Reserve Bank of Dallas. Research Dept. : Online) ;; 0301.
Publisher: Federal Reserve Bank of Dallas
Published: 2003
Place of publication: [Dallas, Tx.]
Language: eng
Format: Electronic resource
Subjects: Fiscal policy -- United States -- Econometric models.; Economic development -- Econometric models.
Description: "In the literature neither taxes, government spending nor deficits are robustly correlated with economic growth when evaluated individually. The lack of correlation may arise from the inability of any single budgetary component to fully capture the stance of fiscal policy. We use pair-wise combinations of fiscal indicators to assess the relationship between fiscal policy and U.S. growth. We develop a VAR methodology for evaluating simultaneous shocks to more than one variable and use it to examine the impulse responses for simultaneous, unexpected and equivalent structural shocks to pair-wise combinations of fiscal indicators. We also exploit the identity relationship between taxes, spending and deficits and follow Sims and Zha (1998) to evaluate an unexpected structural shock to one included fiscal indicator, holding constant the other included indicator. We find that an increase in the size of federal government leads to slower economic growth, that the deficit is an unreliable indicator of the stance of fiscal policy, and that tax revenues are the most consistent indicator of fiscal policy"--Federal Reserve Bank of Dallas web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/26/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.