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| Author: | Ardagna, S. |
| Title: | Fiscal stabilizations: when do they work and why |
| Journal: | European Economic Review
2004 : OCT, VOL. 48:5, p. 1047-1074 |
| Index terms: | Debt Government OECD |
| Language: | eng |
| Abstract: | This article explores the determinants and channels through which fiscal contractions affect the dynamics of the debt-to-GDP ratio and GDP growth in the OECD countries. The results show that successful fiscal adjustments which decrease the debt-to-GDP ratio depend more on the size than the composition of the contractions. The results also indicate that the cut in the deficit is larger when the probability of tight fiscal policies leading to a decrease in the debt-to-GDP ratio increases. Finally, the composition of fiscal policy is an important element for GDP growth and the labor market is an important channel for transmitting fiscal policy shocks. |
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