Fiscal Policy Shocks in the Euro Area and the US: An Empirical Assessment

By Pablo Burriel Llombart, Francisco de Castro Fernández, Daniel Garrote, E. G. Mora, Joan Paredes, J. P. García. Social Science Research Network, 2010

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We analyse the impact of fiscal policy shocks in the euro area as a whole, using a newly available quarterly dataset of fiscal variables for the period 1981-2007. To allow for comparability with previous results on euro area countries and the US, we use a standard structural VAR framework, and study the impact of aggregated and disaggregated government spending and net taxes shocks. In addition, to frame euro area results, we apply the same methodology for the same sample period to US data. We also explore the sensitivity of the provided results to the inclusion of variables aiming at measuring "financial stress" (increases in risk) and "fiscal stress" (sustainability concerns). Analysing US and euro area data with a common methodology provides some interesting insights on the interpretation of fiscal policy shocks.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/79bc356fae2940ce88d925d856954872f4302a59

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Citations in the corpus

The Impact of Fiscal Policy on Economic Activity Over the Business Cycle - Evidence from a Threshold VAR Analysis (2011, background): “Burriel, P., De Castro, F., Garrotte, D. , Gordo, E., Paredes, J. and J.J. Pérez (2010): ”Fiscal Policy Shocks in the Euro Area and the US: An Empirical Assessment”, Fiscal Studies 31(2), pp. 251-285.”