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Fiscal policy shocks in the euro area and the US: an empirical assessment

Author

Listed:
  • Pablo Burriel

    (Banco de España)

  • Francisco de Castro

    (Banco de España)

  • Daniel Garrote

    (Banco de España)

  • Esther Gordo

    (Banco de España)

  • Joan Paredes

    (european central bank)

  • Javier J. Pérez

    (Banco de España)

Abstract
We analyse the impact of fiscal policy shocks in the euro area as a whole, using a newly available quarterly dataset of fiscal variables for the period 1981-2007. To allow for comparability with previous results on euro area countries and the US, we use a standard structural VAR framework, and study the impact of aggregated and disaggregated government spending and net taxes shocks. In addition, to frame euro area results, we apply the same methodology for the same sample period to US data. We also explore the sensitivity of the provided results to the inclusion of variables aiming at measuring "financial stress" (increases in risk) and "fiscal stress" (sustainability concerns). Analysing US and euro area data with a common methodology provides some interesting insights on the interpretation of fiscal policy shocks.

Suggested Citation

  • Pablo Burriel & Francisco de Castro & Daniel Garrote & Esther Gordo & Joan Paredes & Javier J. Pérez, 2009. "Fiscal policy shocks in the euro area and the US: an empirical assessment," Working Papers 0930, Banco de España.
    • Handle: RePEc:bde:wpaper:0930
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    euro area; svar; fiscal shocks; fiscal multipliers;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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