This chapter reviews and synthesizes our current understanding of the shocks that drive
economic fluctuations. The chapter begins with an illustration of the problem of identifying …

Recent evidence suggests that consumption rises in response to an increase in government
spending. That finding cannot be easily reconciled with existing optimizing business cycle …

We propose and apply a new approach for analyzing the effects of fiscal policy using vector
autoregressions. Specifically, we use sign restrictions to identify a government revenue …

We examine the evidence on episodes of large stances in fiscal policy, in cases of both
fiscal stimuli and fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli …

The term “austerity” indicates a policy of sizeable reduction of govern-ment deficits and
stabilization of government debt achieved by means of spending cuts or tax increases, or …

This paper studies how the composition of fiscal adjustments influences their likelihood of"
success," defined as a long-lasting deficit reduction, and their macroeconomic …

Fiscal adjustments Why they can be expansionary This paper examines the evidence on
fiscal adjustments in OECD countries from the early 1960s to today. The results shed light on …

We test the hypothesis that the government bond markets in the Eurozone are more fragile
and more susceptible to self-fulfilling liquidity crises than in stand-alone countries. We find …

This paper evaluates the effects of fiscal policy on investment using a panel of OECD
countries. We find a sizeable negative effect of public spending—and in particular of its …

In the 1980s several countries with large government debt or deficit implemented
substantial, and in some cases drastic, deficit cuts. Contrary to widespread expectations, in …