Expansionary Fiscal Contractions? Evidence from Panel Data

14 Pages Posted: 27 Dec 2004

See all articles by Vincent Hogan

Vincent Hogan

National University of Ireland - University College Dublin; University of Warwick

Abstract

We examine the ability of the expansionary fiscal contraction (EFC) hypothesis to explain the performance of OECD economies during fiscal crises. We find some limited evidence in its favour: if public consumption is reduced in response to a fiscal crisis (as defined by a high level of debt), private consumption does seem to increase. However, the size of the effect is smaller than that typically found in other studies. Furthermore, the increase in private consumption is usually not sufficient to offset the direct effect of a reduction in public consumption on output - fiscal contractions are not literally expansionary.

Suggested Citation

Hogan, Vincent, Expansionary Fiscal Contractions? Evidence from Panel Data. Scandinavian Journal of Economics, Vol. 106, No. 4, pp. 647-659, December 2004. Available at SSRN: https://ssrn.com/abstract=633430

Vincent Hogan (Contact Author)

National University of Ireland - University College Dublin ( email )

Dublin 4
Ireland
+353 1 716 8300 (Phone)
+353 1 283 0068 (Fax)

University of Warwick

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
1,063
PlumX Metrics