Comparing Fiscal Multipliers Across Models and Countries in Europe

48 Pages Posted: 12 Mar 2015

See all articles by Juha Kilponen

Juha Kilponen

Bank of Finland - Research

Massimiliano Pisani

Bank of Italy

Sebastian Schmidt

European Central Bank (ECB)

Vesna Corbo

Sveriges Riksbank - Monetary Policy

Tibor Hlédik

Czech National Bank

Josef Hollmayr

Goethe University Frankfurt

Samuel Hurtado

Banco de España

Paulo Júlio

Bank of Portugal

Dmitry Kulikov

Bank of Estonia

Matthieu Lemoine

Banque de France

Matija Lozej

University of Primorska; Central Bank of Ireland

Henrik Lundvall

Sveriges Riksbank

José Maria

Bank of Portugal

Brian Micallef

Central Bank of Malta - Modelling and Research Office

Dimitris Papageorgiou

Bank of Greece

Jakub Rysanek

Czech National Bank (CNB)

Dimitrios Sideris

Bank of Greece

Carlos Thomas

Banco de España

Gregory de Walque

Facultés Universitaires Notre-Dame de la Paix (FUNDP) - Faculty of Economics, Management and Social Sciences; National Bank of Belgium

Date Written: March 11, 2015

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.

Keywords: fiscal policy, output multipliers, model comparison, zero lower bound

JEL Classification: E12, E13, E17, E62, E63

Suggested Citation

Kilponen, Juha and Pisani, Massimiliano and Schmidt, Sebastian and Corbo, Vesna and Hlédik, Tibor and Hollmayr, Josef and Hurtado, Samuel and Júlio, Paulo and Kulikov, Dmitry and Lemoine, Matthieu and Lozej, Matija and Lundvall, Henrik and Maria, José and Micallef, Brian and Papageorgiou, Dimitris and Rysanek, Jakub and Sideris, Dimitrios and Thomas, Carlos and de Walque, Gregory, Comparing Fiscal Multipliers Across Models and Countries in Europe (March 11, 2015). ECB Working Paper No. 1760. Available at SSRN: https://ssrn.com/abstract=2576673

Juha Kilponen (Contact Author)

Bank of Finland - Research ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland
+358 10 831 2847 (Phone)
+358 10 831 2294 (Fax)

HOME PAGE: http://www.bof.fi/en/suomen_pankki/organisaatio/asiantuntijoita/kilponen_juha/

Massimiliano Pisani

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Sebastian Schmidt

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Vesna Corbo

Sveriges Riksbank - Monetary Policy ( email )

SE-103 37 Stockholm
Sweden

Tibor Hlédik

Czech National Bank ( email )

Na Prikope 28
CZ-11503 Praha 1
Czech Republic

Josef Hollmayr

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Samuel Hurtado

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Paulo Júlio

Bank of Portugal ( email )

Rua Francisco Ribeiro, 2
Lisbon, 1150-165
Portugal

Dmitry Kulikov

Bank of Estonia ( email )

Estonia Building 13
15095 Tallinn
Estonia

Matthieu Lemoine

Banque de France ( email )

Paris
France

Matija Lozej

University of Primorska ( email )

Glagoljaska 8
Koper, SI-6000
Slovenia

Central Bank of Ireland ( email )

Dame Street
Dublin, 2
Ireland

Henrik Lundvall

Sveriges Riksbank ( email )

Brunkebergstorg 11
SE-103 37 Stockholm
Sweden

José Maria

Bank of Portugal ( email )

Rua Francisco Ribeiro, 2
Lisbon, 1150-165
Portugal

Brian Micallef

Central Bank of Malta - Modelling and Research Office ( email )

Valletta, 1060
Malta

Dimitris Papageorgiou

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Jakub Rysanek

Czech National Bank (CNB) ( email )

Na Prikope 28
CZ-11503 Praha 1
Czech Republic

Dimitrios Sideris

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Carlos Thomas

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Gregory De Walque

Facultés Universitaires Notre-Dame de la Paix (FUNDP) - Faculty of Economics, Management and Social Sciences ( email )

Rempart de la Vierge 8
B-5000 Namur
Belgium

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

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