International fiscal spillovers

Faccini, R, Mumtaz, H and Surico, P (2016) International fiscal spillovers. Journal of International Economics, 99 (March). pp. 31-45. ISSN 0022-1996 OPEN ACCESS


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.

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Item Type: Article
Subject Areas: Economics
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© 2015 Elsevier BV

Date Deposited: 13 Dec 2016 13:30
Date of first compliant deposit: 12 Feb 2021
Subjects: Change
Business cycles
Last Modified: 20 Jun 2024 01:38

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