Planned fiscal consolidations and growth forecast errors: New panel evidence on fiscal multipliers

Arbeitspapier

This paper analyzes the effect of planned fiscal consolidation on GDP growth forecast errors from the years 2010-2013 using cross section analyses and fixed effects estimations. Our main findings are that fiscal multipliers have been underestimated in most instances for the year 2011 while we find little to no evidence for the years 2010 and especially the latter years 2012/13. Since the underestimation of fiscal multipliers seems to have decreased over time, it may indicate learning effects of forecasters. However, the implications for fiscal policy should be considered with caution as a false forecast of fiscal multipliers does not confirm that austerity is the wrong fiscal approach but only suggests a too optimistic assessment of fiscal multipliers for the year 2011.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ROME Discussion Paper Series ; No. 15-04

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Policy Objectives; Policy Designs and Consistency; Policy Coordination ; Fiscal Policy ; Financial Crises
• Subject: fiscal multiplier ; austerity ; growth forecast errors ; panel econometrics

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Belke, Ansgar ; Kronen, Dominik ; Osowski, Thomas
• Event: Veröffentlichung
• (who): Research On Money in the Economy (ROME)
• (where): s.l.
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/156212
• Last update: 10.03.2025, 11:44 AM CET