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| Author: | Forni, L. Monteforte, L. Sessa, L. |
| Title: | The general equilibrium effects of fiscal policy: Estimates for the Euro area |
| Journal: | Journal of Public Economics
2009 : APR, VOL. 93:3-4, p. 559-585 |
| Index terms: | fiscal policy taxation euro Bayesian statistics estimation European Union |
| Freeterms: | EMS EMU |
| Language: | eng |
| Abstract: | In this paper, described is a dynamic stochastic general equilibrium model featuring a fraction of non-Ricardian agents to estimate the effects of fiscal policy in the Euro area. The model considers distortionary taxation on labour and capital income and on consumption, with expenditures broken down into purchases of goods and services, compensation of public employees and transfers to households. The results refer to the prevalence of mild Keynesian effects of public expenditures. Especially, although innovations in fiscal policy variables tend to be rather persistent, government purchases of goods and services and compensations for public employees have small and short-lived expansionary effects on private consumption, whereas innovations in transfers to households show a slightly more sizeable and lasting effect etc. |
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