Fiscal and Monetary Policy During Downturns : Evidence From the G7 / Sven Jari Stehn, Daniel Leigh.

Format:

Book

Government document

Author/Creator:

Stehn, Sven Jari.

Contributor:

Leigh, Daniel.

International Monetary Fund. Fiscal Affairs Department.

Series:

IMF Working Papers; Working Paper ; No. 2009/050

IMF Working Papers

Language:

English

Subjects (All):

Fiscal policy.

Monetary policy.

Physical Description:

1 online resource (23 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2009.

Language Note:

English

Summary:

This paper analyzes how fiscal and monetary policy typically respond during downturns in G7 countries. It evaluates whether discretionary fiscal responses to downturns are timely and temporary, and compares the response of fiscal policy to that of monetary policy. The results suggest that while responding more weakly and less quickly than monetary policy, discretionary fiscal policy is more timely than conventional wisdom would suggest, particularly in “Anglo-Saxon” countries, but the response differs substantially across fiscal instruments. Both fiscal and monetary policy are found to be subject to an easing bias, with more easing during downturns than tightening during upturns; and liable to easing in response to erroneously perceived downturns, many of which are subsequently revised to expansions.

Contents:

Contents; I. Introduction and Summary; II. Event-Study Analysis; A. Data and Methodology; B. Results; Tables; 1. How Often and Quickly did Fiscal Stimulus Arriva During Downturns?; III. Vector-Autoregression (VAR) Analysis; A. Methodology; 2. How Often and Quickly did Fiscal Stimulus Arrive During Upturns?; B. Baseline Results; Figures; 1. How Strongly do Fiscal and Monetary Policy Respond?; 2. How does the Response Vary Across Fiscal Instruments and G7 Members?; 3. How Robust is the Response to the Cyclical Indicator?; C. Asymmetry; 4. Is There a Bias Towards Easing in Downturn?

D. Policy in Real Time5. Errors in Identifying Negative Growth in the G7; 3. How Reliable are Preliminary Growth Estimates?; 6. Has Policy Erroneously Responded to Perceived Growth Shocks?; IV. Case Study: Have U.S. Tax Cuts Been Timely and Temporary?; V. Conclusion; 4. Legislated Tax Changes During Downturns; 5. Summary of Countercyclical Tax Changes; References

Notes:

"March 2009."

Includes bibliographical references.

Description based on print version record.

ISBN:

9786612842726

9781462315420

1462315429

9781452706689

1452706689

9781451871982

1451871988

9781282842724

1282842722

OCLC:

650287747