The Effects of Discretionary Fiscal Policy on Macroeconomic Aggregates: A Reappraisal

Abstract

Fiscal stimuli to recover? A cascade of academic and layman-articles debate the effectiveness of fiscal policy in stimulating the economy backed up by different economic models and empirical support. This essay surveys the theoretical predictions and recent empirical Vector Autoregression (VAR) evidence on the short-run effects of discretionary fiscal policy on macroeconomic aggregates.Macroeconomic Policy, Fiscal Policy, Multipliers, Fiscal Stimulus, VAR