Title Medium-term fiscal multipliers during protracted recessions / prepared by Salvatore Dell'Erba, Marcos Poplawski-Ribeiro, and Ksenia Koloskova

Published [Washington, D.C.] : International Monetary Fund, ©2014

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Description 1 online resource (42 pages) : color illustrations Series IMF working paper ; WP/14/213 IMF working paper ; WP/14/213 Contents Cover Page; Title Page; Copyright Page; Contents; Tables; Figures; I. Introduction; II. Literature Review; III. Transmission Mechanisms; IV. Data and Empirical Strategy; A. Data; 1. Summary Statistics; B. Stylized Facts; 2. Stylized Facts; C. Methodology; D. Medium-Term Multipliers; V. Results; A. Effects of a Fiscal Consolidation: Replication of the Literature; 1. Effects of Consolidation on Real GDP: Replication of the Literature; B. Non-Linear Estimation; 2. Asymmetric Effects of Fiscal Consolidations on Real GDP; 3. Asymmetric Effects of Fiscal Consolidations on Employment 4. Asymmetric Effects of Fiscal Consolidations on Unemployment3. Baseline Results-Cumulative Multipliers during Episodes of Non-Protracted and Protracted Recession; C. Evidence on Transmission Mechanisms; 5. Transmission Channels of Fiscal Consolidations; 4. Transmission Channels of Fiscal Consolidations; VI. Robustness Checks and Additional Tests; 6. Effects of Fiscal Consolidations on Real GDP; 5. Cumulative Multipliers using Unemployment Gap as Measure of Slack; 6. Robustness to the Exclusion of Single Countries; 7. Controlling for Credit Growth; VII. Conclusion; References; Appendixes Summary The paper examines the consequences of fiscal consolidation in times of persistently low growth and high unemployment by estimating medium-term fiscal multipliers during protracted recessions (PR) in a sample of 17 OECD countries. Based on Jorda's (2005) local projection methodology, we find that cumulative fiscal multipliers related to output, employment and unemployment at five-year horizons are significantly above one during PR episodes. These results suggest that medium-term fiscal consolidation plans to reduce public debt burdens should proceed gradually if economic activity remains below trend for a prolonged period.--Abstract Notes "December 2014." "Fiscal Affairs Department." Bibliography Includes bibliographical references (pages 22-26) Notes Online resource; title from pdf title page (IMF.org Web site, viewed December 8, 2014) Subject National income -- Developed countries Expenditures, Public. Government spending policy -- Developed countries Recessions -- Developed countries Unemployment -- Developed countries Labor market -- Developed countries Fiscal policy -- Developed countries Economic development -- Developed countries Economic development Expenditures, Public Fiscal policy Government spending policy Labor market National income Recessions Unemployment Developed countries Form Electronic book Author Ribeiro, Marcos Poplawski, 1977- author Koloskova, Ksenia, author International Monetary Fund. Fiscal Affairs Department, issuing body ISBN 9781475559194 1475559194

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