Do Fiscal Spillovers Matter?

44 Pages Posted: 7 Sep 2011

See all articles by Anna Ivanova

Anna Ivanova

International Monetary Fund (IMF) - European Department

Sebastian Weber

International Monetary Fund (IMF)

Date Written: September 2011

Abstract

The paper assesses the impact of fiscal spillovers on growth in the context of a coordinated exit from crisis management policies. We find that despite potentially sizeable domestic effects from consolidation, aggregate negative spillovers to other countries are likely to be contained in 2011-2012 unless fiscal multipliers and/or imports elasticities are very large. Small and open European economies, however, will be substantially affected in any case. In contrast, the coordinated exit from fiscal stimulus will have limited direct effect on European peripheral countries since they are relatively closed, with the notable exception of Ireland.

Keywords: Economic growth, Economic models, Fiscal consolidation, Fiscal policy, Spillovers

Suggested Citation

Ivanova, Anna and Weber, Sebastian, Do Fiscal Spillovers Matter? (September 2011). IMF Working Papers, Vol. , pp. 1-43, 2011. Available at SSRN: https://ssrn.com/abstract=1923525

Anna Ivanova (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Sebastian Weber

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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