Download This PaperThe Aggregate Effects of Fiscal Policy in the United Kingdom
64 Pages Posted: 8 May 2020
Date Written: September 1, 2017
Abstract
Growing literature on the effects of fiscal policy has evolved in the recent years. The availability of narrative methods has improved the validity and precision of macroeconometric methods. This paper uses narratively identified tax changes in a Proxy SVAR framework to empirically assess the macroeconomic effects of fiscal policy in the United Kingdom. Additionally, we produce estimates based on the Blanchard Perotti (2002) approach and recent narrative methods. Our results suggest large tax multipliers above one with significant short-run impact. The results for the government spending multipliers are positive but less conclusive.
Keywords: Proxy SVAR, fiscal policy, multiplier, taxes, government spending
JEL Classification: E60, E62
Suggested Citation: Suggested Citation
