Fiscal Multipliers During the Global Financial Crisis: Fiscal and Monetary Interaction Matters

14 Pages Posted: 8 Nov 2014

See all articles by Ju Hyun Pyun

Ju Hyun Pyun

Korea University Business School (KUBS)

Dong Eun Rhee

Myongji University

Multiple version iconThere are 2 versions of this paper

Date Written: January 2015

Abstract

This study investigates the fiscal multipliers of 21 Organization for Economic Co‐operation and Development countries during the global financial crisis using panel vector auto regression methodology. Our findings suggest that the 1‐year fiscal multiplier was greater than 1 during the crisis, whereas it was less than 1 before the crisis because of different fiscal and monetary interactions. The combination of expansionary monetary and fiscal policies during the crisis boosted gross domestic product more effectively through internal and external transmissions: investment crowding‐out was limited, and net exports were spurred by the policy interaction. In addition, our results are robust to various specifications.

Suggested Citation

Pyun, Ju Hyun and Rhee, Dong Eun, Fiscal Multipliers During the Global Financial Crisis: Fiscal and Monetary Interaction Matters (January 2015). Contemporary Economic Policy, Vol. 33, Issue 1, pp. 207-220, 2015. Available at SSRN: https://ssrn.com/abstract=2520680 or http://dx.doi.org/10.1111/coep.12067

Ju Hyun Pyun (Contact Author)

Korea University Business School (KUBS) ( email )

145 Anam-Ro, Seongbuk-Gu
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Korea, Republic of (South Korea)
82-2-3290-2610 (Phone)

HOME PAGE: http://sites.google.com/site/juhyunpyun/research

Dong Eun Rhee

Myongji University ( email )

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