Natural Experiments in Macroeconomics

Nicola Fuchs-Schuendeln and Tarek Hassan

No 21228, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A growing literature relies on natural experiments to establish causal effects in macroeconomics. In diverse applications, natural experiments have been used to verify underlying assumptions of conventional models, quantify specific model parameters, and identify mechanisms that have major effects on macroeconomic quantities but are absent from conventional models. We discuss and compare the use of natural experiments across these different applications and summarize what they have taught us about such diverse subjects as the validity of the Permanent Income Hypothesis, the size of the fiscal multiplier, and about the effects of institutions, social structure, and culture on economic growth. We also outline challenges for future work in each of these fields, give guidance for identifying useful natural experiments, and discuss the strengths and weaknesses of the approach.

JEL-codes: C1 C9 E21 E62 H31 O11 O14 O43 O50 (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-mac and nep-pke
Note: DAE EFG IFM ITI ME PE POL
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Citations: View citations in EconPapers (34)

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Related works:
Chapter: Natural Experiments in Macroeconomics (2016)
Working Paper: Natural Experiments in Macroeconomics (2015)
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