On the estimation of panel fiscal reaction functions: Heterogeneity or fiscal fatigue?

Autor:	Stijn Jansen, Gerdie Everaert
Rok vydání:	2018
Předmět:	Estimation Economics and Econometrics Balance (accounting) Debt media_common.quotation_subject 0502 economics and business 05 social sciences Econometrics Economics Oecd countries 050207 economics 050205 econometrics media_common
Zdroj:	Economic Modelling. 70:87-96
ISSN:	0264-9993
DOI:	10.1016/j.econmod.2017.10.014
Popis:	This paper investigates whether fiscal fatigue is a robust characteristic of the fiscal reaction function in a panel of OECD countries over the period 1970–2014 or merely an artifact of ignoring important aspects of the panel dimension of the data. More specifically, we test whether the quadratic and cubic debt-to-GDP terms remain significant once a country-specific reaction of the primary balance to lagged debt is allowed for. The results show a significant heterogeneous reaction of the primary balance to lagged debt with fiscal fatigue not being a general characteristic of the fiscal reaction function shared by all countries in our panel. In line with the literature, we further find that fiscal balances tend to deteriorate in contractions without correspondingly improving during expansions.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::84690b57d2b6c4359242198b6bcf4008 https://doi.org/10.1016/j.econmod.2017.10.014 Zobrazit plný text záznamu Full Text from ScienceDirect