The Effectiveness of Fiscal Policy in Stimulating Economic Activity: A Review of the Literature
- 1 January 2002
- journal article
- review article
- Published by International Monetary Fund (IMF) in IMF Working Papers
- Vol. 2 (208)
- https://doi.org/10.5089/9781451874716.001
Abstract
This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.Keywords
All Related Versions
This publication has 82 references indexed in Scilit:
- Fiscal policy in general equilibrium: empirical estimates from an error correction modelApplied Economics, 1999
- Fiscal crises and aggregate demand: can high public debt reverse the effects of fiscal policy?Journal of Public Economics, 1997
- Empirical Determinants of Household Saving: Evidence From OECD CountriesIMF Working Papers, 1997
- Does government debt affect the exchange rate? An empirical analysis of the U.S.—Canadian exchange rateJournal of Economics and Business, 1990
- Threshold Externalities in Economic DevelopmentThe Quarterly Journal of Economics, 1990
- Temporary and permanent government spending in an open economy: Some evidence for the United KingdomJournal of Monetary Economics, 1986
- Optimal fiscal and monetary policy in an economy without capitalJournal of Monetary Economics, 1983
- Government financing decisions and asset returnsJournal of Monetary Economics, 1982
- Government deficits and aggregate demandJournal of Monetary Economics, 1982
- An Equilibrium Model of the Business CycleJournal of Political Economy, 1975