The Macroeconomic Effects of Exogenous Fiscal Policy Shocks in Germany: A Disaggregated SVAR Analysis
By J. Tenhofen, Guntram B. Wolff, Kirsten H. Heppke-Falk. Social Science Research Network, 2006
183 citations recorded by the source corpus.
Summary We investigate the effects of fiscal policy shocks on the German economy extending the SVAR approach of Blanchard and Perotti (2002). Direct government expenditure shocks are found to increase output and private consumption on impact. The output multiplier is smaller than one and is falling rather quickly reaching zero after 3 years. Government operating expenditure has size able positive effects on output, in the long run in particular due to public capital formation. Compensation of public employees is not effective in stimulating the economy.Government net revenue shocks do not affect output significantly. Indirect taxes have little effects, while direct taxes lower output significantly. Overall, the effects of fiscal policy are short-lived with the exception of public investment increases.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/8eb30cc24c94139e9f7ecf02270bf02cfb8bed85
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In Economics and Econometrics
Citations in the corpus
- The macroeconomic effects of fiscal policy (2012, unknown): “Heppke-Falk et al. (2006) use cash data for Germany, and find that a positive shock in government spending increases output and private consumption, although the effect is relatively small.”
- The Impact of Fiscal Policy on Economic Activity Over the Business Cycle - Evidence from a Threshold VAR Analysis (2011, methodology): “26This approach is in line with other studies for Germany, such as Heppke-Falk et al. (2010) and Bode et al. (2006).”