Fiscal Policy and Economic Activity During Recessions in Advanced Economies
24 Pages Posted: 31 Jan 2006
Date Written: May 2002
Using data for advanced economies, this paper investigates whether factors identified in the theoretical and empirical literature explain the effectiveness of fiscal policy in responding to recessions. The results are informative about the fiscal response to recessions but provide only a partial explanation of the impact of fiscal policy on economic activity. Overall, it would appear that fiscal multipliers are very small.
Keywords: Recessions, fiscal response, economic activity, fiscal multipliers
JEL Classification: C21, E62, E65, H30
Suggested Citation: Suggested Citation