Cross-country evidence on determinants of fiscal policy effectiveness the role of trade and capital flows Agata Wierzbowska and Masahiko Shibamoto
By: Wierzbowska, Agata
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Contributor(s): Shibamoto, Masahiko.
Material type: 
ArticlePublisher: 2018Subject(s): POLITICA FISCAL | GASTO PUBLICO | EFECTO MULTIPLICADOR | OPERACIONES TRANSFRONTERIZASOnline resources: Click here to access online
In:
Applied Economics v. 50, n. 31-33, July 2018, p. 3493-3514Summary: This article studies the determinants of size differentials between fiscal multipliers in countries around the world, both advanced and developing economies. We introduce variables not
considered before for explaining multiplier size differentials, such as capital flows and the openness of capital markets, while controlling for domestic conditions and exchange rate regimes. We also disaggregate GDP into its main components in order to identify the channels through which external and internal factors can influence GDP after a change in fiscal policy. Our results point to the existence of a new channel through which fiscal policy effectiveness is affected. Capital flows, especially FDI flows, play an important role in determining the sizes of fiscal multipliers, and a country’s external conditions largely explain GDP changes after fiscal expenditure shocks. Our results also point towards a strong link between a country’s international position and its real economy.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 567/2018/31/33-1 (Browse shelf) | Available | OP 567/2018/31/33-1 |
Disponible en formato electrónico a través de la Biblioteca del IEF.
Resumen.
This article studies the determinants of size differentials between fiscal multipliers in countries around the world, both advanced and developing economies. We introduce variables not
considered before for explaining multiplier size differentials, such as capital flows and the openness of capital markets, while controlling for domestic conditions and exchange rate regimes. We also disaggregate GDP into its main components in order to identify the channels through which external and internal factors can influence GDP after a change in fiscal policy. Our results point to the existence of a new channel through which fiscal policy effectiveness is affected. Capital flows, especially FDI flows, play an important role in determining the sizes of fiscal multipliers, and a country’s external conditions largely explain GDP changes after fiscal expenditure shocks. Our results also point towards a strong link between a country’s international position and its real economy.
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