The Effects of Expenditure Shocks in Italy During Good and Bad Times

Conference paper
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Abstract

We study the effects of expenditure shocks on macroeconomic developments in Italy over the period 1982–2011 with a Structural VAR model. We include foreign demand and public debt, imposing the government budget constraint. We find that movements in debt induce stabilizing reactions in net revenues. Expenditure shocks have positive and significant effects on economic activity. To study how fiscal multipliers vary over the business cycle, we estimate a Smooth Transition Vector Autoregression (STVAR) model, finding that the fiscal multiplier tends to be higher in recessions than in expansions.

Keywords

Interest Rate Fiscal Policy Government Consumption Public Debt Government Debt 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Copyright information

© Springer-Verlag Italia 2013

Authors and Affiliations

  1. 1.Bank of ItalyRomeItaly

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