| Description |
1 online resource (31 pages) |
| Series |
IMF working paper ; WP13/182 |
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IMF working paper ; WP13/182.
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| Contents |
Cover; Abstract; Contents; I. Introduction; II. Literature review; III. Methodology and Stylized Examples; Figures; 1. Effect of a One-time Permanent Fiscal Tightening; 2. An Illustration: Implied Real Output Under Multi-year Fiscal Adjustments; Boxes; 1. A Stylized Example: Baseline Assumptions for an Advanced Economy; 3. Basic Setup: Fiscal Multiplier and Debt Dynamics; 4. Varying Fiscal Multiplier; 5. Output Under Fiscal Multiplier and Hysteresis Effects; 6. Fixed Fiscal Multiplier with Hysteresis Effects; 7. Varying Fiscal Multipliers with Hysteresis Effects |
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8. Varying Multiplier, Hysteresis Effects and Endogenous Interest Rate9. Delayed Fiscal Adjustment; 10. A Stylized Example of an Emerging Market; 2. A Variant Stylized Example: An Emerging Market; IV. Application to Country Examples; 11. Country Examples: Fiscal Multiplier Effects; 12. Country Examples: Smaller Multipliers and HP-filtered Potential Output; 13. Country Examples: Greece with High Multiplier; 14. Illustration: Greece with Alternative Potential Output; V. Conclusions; 15. Country Examples: Original vs. Current Projections Under the Greece Program; Appendix; References |
| Summary |
"This paper provides a general framework to assess the output and debt dynamics of an economy undertaking multi-year fiscal adjustment. The framework allows country-specific assumptions about the magnitude and persistence of fiscal multipliers, hysteresis effects, and endogenous financing costs. In addition to informing macro projections, the framework can also shed light on the appropriate phasing of fiscal consolidation - in particular, on whether it should be front- or back-loaded. The framework is applied to stylized advanced and emerging economy examples. It suggests that for a highly-indebted economy undertaking large multi-year fiscal consolidation, high multipliers do not always argue against frontloaded adjustment. The case for more gradual or back-loaded adjustment is strongest when hysteresis effects are in play, but it needs to be balanced against implications for debt sustainability. Application to actual country examples tends to cast doubt on claims that very large multipliers have been operating post-crisis. It seems that the GDP forecast errors for Greece may have been due more to over-optimism on potential growth estimates than to underestimating fiscal multipliers."--Summary |
| Notes |
"August 2013." |
| Subject |
Fiscal policy -- Econometric models
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Debts, Public -- Econometric models
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Debts, Public -- Econometric models
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Fiscal policy -- Econometric models
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| Form |
Electronic book
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| Author |
Qu, Haonan, author.
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Roaf, James, author.
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International Monetary Fund. Strategy, Policy, and Review Department, issuing body.
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