International fiscal spillovers

Faccini, R and Mumtaz, H and Surico, P (2015) International fiscal spillovers. Journal of International Economics, 99 (March). pp. 31-45. ISSN 0022-1996

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Abstract

A two-country business cycle model featuring nominal rigidities, countercyclical mark-ups, rule of thumb consumers and government spending reversals is used to identify inequality predictions that are robust across a range of empirically plausible parameterizations. These robust inequality restrictions are imposed onto a regime-change factor model for the United States and its main trade partners to estimate the international fiscal spillovers. The effects of U.S. government spending on foreign real activity are found to be sizable and significant, operating mainly by lowering real interest rates rather than boosting trade balances. In contrast, there seems to be only limited evidence of state dependence in the international transmission of fiscal policy.

Item Type: Article
Additional Information: © 2015 Elsevier BV
Subjects: C > Change
F > Finance
B > Business cycles
Subject Areas: Finance
DOI: 10.1016/j.jinteco.2015.11.009
Date Deposited: 13 Dec 2016 13:30
Last Modified: 13 Dec 2016 13:31
URI: http://lbsresearch.london.edu/id/eprint/741

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