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Comparing fiscal multipliers across models and countries in Europe

Author

Listed:
  • de Walque, Gregory
  • Pisani, Massimiliano
  • Kilponen, Juha
  • Thomas, Carlos
  • Hlédik, Tibor
  • Hurtado, Samuel
  • Hollmayr, Josef
  • Corbo, Vesna
  • Schmidt, Sebastian
  • Micallef, Brian
  • Maria, José R.
  • Sideris, Dimitris
  • Lozej, Matija
  • Júlio, Paulo
  • Kulikov, Dmitry
  • Rysanek, Jakub
  • Papageorgiou, Dimitris
  • Lundvall, Henrik
  • Lemoine, Matthieu
Abstract
This paper employs fifteen dynamic macroeconomic models maintained within the European System of Central Banks to assess the size of fiscal multipliers in European countries. Using a set of common simulations, we consider transitory and permanent shocks to government expenditures and different taxes. We investigate how the baseline multipliers change when monetary policy is transitorily constrained by the zero nominal interest rate bound, certain crisis-related structural features of the economy such as the share of liquidity-constrained households change, and the endogenous fiscal rule that ensures fiscal sustainability in the long run is specified in terms of labour income taxes instead of lump-sum taxes. JEL Classification: E12, E13, E17, E62, E63

Suggested Citation

  • de Walque, Gregory & Pisani, Massimiliano & Kilponen, Juha & Thomas, Carlos & Hlédik, Tibor & Hurtado, Samuel & Hollmayr, Josef & Corbo, Vesna & Schmidt, Sebastian & Micallef, Brian & Maria, José R. &, 2015. "Comparing fiscal multipliers across models and countries in Europe," Working Paper Series 1760, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20151760
    Note: 2179645
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    fiscal policy; model comparison; output multipliers; zero lower bound;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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