Fiscal policy in Europe: The importance of making it predictable

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• 作者：Lilia Cavallari ; ^{lilia.cavallari@uniroma3.it} ; Simone Romano ^{simone.romano@uniroma3.it}
• 关键词：E62 ; F45 ; H62
• 刊名：Economic Modelling
• 出版年：2017
• 出版时间：January 2017
• 年：2017
• 卷：60
• 期：Complete
• 页码：81-97
• 全文大小：2448 K
• 卷排序：60

文摘

The paper provides novel evidence on the effectiveness of fiscal policy in Europe. Based on two-country VAR models, it identifies surprise and foresight shocks. A surprise stimulus triggers expectations of deficit reversals in all samples. Expected reversals crowd out private expenditure and depress activity in France and Italy. An anticipated stimulus, instead, boosts economic activity at home and abroad. This evidence has important consequences for discretionary policy.