The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries

26 Pages Posted: 2 Feb 2011

See all articles by Norman Gemmell

Norman Gemmell

Victoria University of Wellington - Victoria Business School

Richard Kneller

University of Nottingham

Ismael Sanz

Universidad Rey Juan Carlos

Date Written: February 1, 2011

Abstract

The literatures testing for aggregate short-run or long-run growth impacts of fiscal policy use quite different methodologies. The former generally focuses on temporary fiscal shocks; the latter typically have no short-run dynamics or assume homogeneity. We use regression methods that treat heterogeneous short-run dynamics explicitly within a long-run model. Results suggest that previously estimated long-run growth effects of fiscal policy are typically achieved quickly, consistent with results from short-run models. In principle these short-run effects persist; in practice regular fiscal policy changes in OECD countries mean that persistent increases or decreases in growth rates are rare.

Suggested Citation

Gemmell, Norman and Kneller, Richard and Sanz, Ismael, The Timing and Persistence of Fiscal Policy Impacts on Growth: Evidence from OECD Countries (February 1, 2011). The Economic Journal, Vol. 121, Issue 550, pp. F33-F58, 2011. Available at SSRN: https://ssrn.com/abstract=1753492 or http://dx.doi.org/10.1111/j.1468-0297.2010.02414.x

Norman Gemmell

Victoria University of Wellington - Victoria Business School ( email )

PO Box 600
Wellington 6140
New Zealand

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Ismael Sanz

Universidad Rey Juan Carlos ( email )

Calle Tulipán, s/n
Madrid, Móstoles 28230
Spain

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
664
PlumX Metrics