Template-type: ReDif-Paper 1.0
Author-Name: Candelon Bertrand 
Author-Name: Lieb Lenard 
Author-workplace-name: METEOR
Title: Fiscal Policy in Good and Bad Times
Abstract: Using a Threshold Vector Autoregression framework identified via sign restrictions, we answer three questions: First, are fiscal policy shocks regime-dependent? Second, which variables are governing the regime? Third, what are the effects of fiscal policies on the main macroeconomic variables in each of these states? The linearity hypothesis is strongly rejected, with the two detected regimes clearly identifiable as recession and boom phases. We find that fiscal policy shocks have a stronger impact in times of economic stress than in times of expansion, and that direct spending policies are more efficient than tax-cut policies in stabilizing the economy in the short-run.
Keywords: monetary economics ; 
Series: Research Memoranda
Creation-Date: 2011
Number: 001
File-URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:3e7b87f8-2b04-4c66-a131-580fe335c99d/datastreams/ASSET1/content
File-Format: application/pdf
File-Size: 5200682
Handle: RePEc:unm:umamet:2011001