The effects of fiscal policy on consumption in recessions and expansions

• 成果类型: Article
• 署名作者: Tagkalakis, Athanasios
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.11.007
• 发表日期: 2008
• 页码: 1486-1508
• 关键词: Fiscal policy; liquidity constraints; consumption; recessions

摘要

This paper explores in a yearly panel of nineteen OECD countries from 1970-2002 the effects of fiscal policy changes on private consumption in recessions and expansions. In the presence of binding liquidity constraints on households, fiscal policy is more effective in boosting private consumption in recessions than in expansions. The effect is more pronounced in countries characterized by a less developed consumer credit market. This happens because the fraction of individuals that face binding liquidity constraints in a recession will consume the extra income generated following an unanticipated tax cut or government spending increase. (c) 2007 Elsevier B.V. All rights reserved.