Do Fiscal Spillovers Matter?

September 1, 2011

Preview Citation

Format: Chicago

Sebastian Weber, and Anna Ivanova. Do Fiscal Spillovers Matter?, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper assesses the impact of fiscal spillovers on growth in the context of a coordinated exit from crisis management policies. We find that despite potentially sizeable domestic effects from consolidation, aggregate negative spillovers to other countries are likely to be contained in 2011-2012 unless fiscal multipliers and/or imports elasticities are very large. Small and open European economies, however, will be substantially affected in any case. In contrast, the coordinated exit from fiscal stimulus will have limited direct effect on European peripheral countries since they are relatively closed, with the notable exception of Ireland.

Subject: Expenditure, Financial sector policy and analysis, Fiscal consolidation, Fiscal policy, Imports, International trade, Spillovers

Keywords: Baseline multiplier, Consolidation plan, Coordinated fiscal exit, Expenditure multiplier, Fiscal consolidation, Fiscal policy, Global, Import elasticity, Imports, Potential GDP, Simple average, Spillover effect, Spillovers, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/211
Stock No:

WPIEA2011211
ISBN:

9781463902315
ISSN:

1018-5941

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