The effectiveness of tax rebates as countercyclical fiscal policy

Jonathan A. Parker 17 June 2014

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A decade ago, there was general agreement among practitioners and academics about the conduct of policy to stabilise developed economies. Governments limited anti-recessionary policy to responses by central banks, which in turn limited their policies to adjustments in short-term interest rates through open market operations. Policymakers and researchers disagreed mostly about the scale and timing of interest rate policy within the context of the New Keynesian model of how stabilisation policy worked in principle (as in Woodford 2003).

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Topics:  Monetary policy

Tags:  recessions, fiscal stimulus, tax rebates

Housing market responses to transaction taxes: Evidence from notches and stimulus in the UK

Michael Best, Henrik Kleven 19 December 2013

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Housing wealth represents the bulk of homeowners' portfolios. Moreover the housing market is important at a macroeconomic scale, and is seen as a key link between the financial economy and the real economy. Previous work on the determinants of prices and demand in the housing market has focused primarily on the role of interest rates and other credit market conditions (Himmelberg et al. 2005, Glaeser et al. 2010, Adelino et al. 2012) and the tax treatment of mortgage interest, imputed rental income and housing capital gains (Poterba 1984, 1992, Rosen 1985, Poterba and Sinai 2008).

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Topics:  Taxation

Tags:  business cycles, fiscal stimulus, housing market, tax policy

Fiscal stimulus in times of high public debt: Reconsidering multipliers and twin deficits

Christiane Nickel, Andreas Tudyka 07 September 2013

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The stimulus impact of a government-spending shocks varies with the economic environment (Ilzetzki, Mendoza, and Végh 2013). One important determinant is the level of government indebtedness – particularly when the nation’s fiscal sustainability may be in doubt. The economic logic of this is straightforward.

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, Eurozone crisis

The lessons of the North Atlantic crisis for economic theory and policy

Joseph Stiglitz 09 May 2013

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Editor’s note: This is the fourth of four columns sharing reflections on the recent IMF conference “Rethinking Macro Policy II: First Steps and Early Lessons”.

In analysing the most recent financial crisis, we can benefit somewhat from the misfortune of recent decades. The approximately 100 crises that have occurred during the last thirty years –as liberalisation policies became dominant – have given us a wealth of experience and mountains of data. If we look over a 150-year period, we have an even richer data set.

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, fiscal multiplier

Preventing the next catastrophe: Where do we stand?

David Romer 09 May 2013

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Editor’s note: This is the third of four columns sharing reflections on the recent IMF conference “Rethinking Macro Policy II: First Steps and Early Lessons”.

As I listened to the presentations and discussions, I found myself thinking about the conference (IMF 2013) from two perspectives:

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, fiscal multiplier

Rethinking macroeconomic policy

Olivier Blanchard 09 May 2013

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Editor's note: This is the second of four columns sharing reflections on the recent IMF conference “Rethinking Macro Policy II: First Steps and Early Lessons”.

The IMF has just hosted a second conference (IMF 2013) devoted to rethinking macroeconomic policy in the wake of the crisis. After two days of fascinating presentations and discussions, I am certain of one thing: this is unlikely to be our last conference on the subject.

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, fiscal multiplier

The cat in the tree and further observations: Rethinking macroeconomic policy

George A. Akerlof 09 May 2013

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Editor's note: This is the first of four columns sharing reflections on the recent IMF conference “Rethinking Macro Policy II: First Steps and Early Lessons”.

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, fiscal multiplier

Output spillovers from fiscal policy

Alan J Auerbach, Yuriy Gorodnichenko 10 December 2012

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Policymakers seeking to stabilise the economy face many challenges. A recent set of challenges is shocks from abroad. Such shocks can come from many directions: trade channels as during the Great Trade Collapse of 2009; financial linkages as during the 2008 Global Crisis; and capital flows (Crucini et al. 2008). Foreign fiscal policy is one shock that has been especially prominent during the Eurozone crisis and the US fiscal cliff discussion.

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Topics:  Europe's nations and regions

Tags:  fiscal stimulus, Greece, Eurozone crisis, fiscal spillovers

The Procyclicalists: Fiscal austerity vs. stimulus

Jeffrey Frankel 07 August 2012

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The world is seized by a debate between fiscal austerity and fiscal stimulus. Opponents of austerity worry about contractionary effects on the economy. Opponents of stimulus worry about indebtedness and moral hazard (see Corsetti 2012).

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Topics:  Macroeconomic policy

Tags:  fiscal stimulus, austerity, countercyclical fiscal policy

Fiscal spending and growth: More patterns

Céline Carrère, Jaime de Melo 17 May 2012

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As the Eurozone is entering into recession, fiscal policy has moved to centre stage. The extent of austerity has been widely attacked, including by IMF staff (Cottarelli 2012), while the design of fiscal policy, namely expenditure reductions versus tax increases (Alesina and Giavazzi 2012), has also come under scrutiny.

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Topics:  Macroeconomic policy

Tags:  developing countries, fiscal stimulus, fiscal deficit

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