An Exploration of the Private Sector Response to Changes in Government Saving Across OECD Countries

26 Pages Posted: 14 Feb 2006

See all articles by Alun H. Thomas

Alun H. Thomas

International Monetary Fund (IMF) - European Department

Date Written: May 2001

Abstract

Several recent papers have examined the response of national saving to changes in fiscal policy. This paper uses knowledge about the intergenerational fiscal position of a country to determine whether this information helps to explain cross country differences in the nature of the response. Using OECD data the paper finds that in countries in intergenerational fiscal balance, the private sector completely offsets fiscal policy changes whereas in other countries the private sector offset is only partial. Moreover, in countries with large intergenerational fiscal imbalances, strong fiscal consolidation packages reduce the impact of changes in fiscal policy on national saving.

Keywords: fiscal policy, intergenerational fiscal balance, Ricardian effects

Suggested Citation

Thomas, Alun, An Exploration of the Private Sector Response to Changes in Government Saving Across OECD Countries (May 2001). IMF Working Paper No. 01/69, Available at SSRN: https://ssrn.com/abstract=879568

Alun Thomas (Contact Author)

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

700 19th Street NW
Washington, DC 20431
United States

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