Fiscal Policy Discretion, Private Spending, and Crisis Episodes

Luca Agnello (), Davide Furceri and Ricardo Sousa

No 31/2011, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: In this paper, we assess the impact of fiscal policy discretion on economic activity in the short and medium-term. Using a panel of 132 countries from 1960 to 2008, we find that fiscal policy discretion provides a net stimulus to the economy in the short-run and crowding-in effects are amplified once crisis episodes are controlled for– in particular, banking crises - giving a great scope for fiscal policy stimulus packages. However, crowding-out effects take over in the long-run – especially, in the case of debt crises -, in line with the concerns about long-term debt sustainability.

Keywords: Fiscal policy discretion; GDP growth; private consumption; private investment; crowding-in; crowding-out (search for similar items in EconPapers)
JEL-codes: E0 E6 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cba and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www3.eeg.uminho.pt/economia/nipe/docs/2011/NIPE_WP_31_2011.pdf (application/pdf)

Related works:
Working Paper: Fiscal Policy Discretion, Private Spending, and Crisis Episodes (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nip:nipewp:31/2011

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NIPE Working Papers from NIPE - Universidade do Minho Núcleo de Investigação em Políticas Económicas e Empresariais, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal. Contact information at EDIRC.
Bibliographic data for series maintained by NIPE ().