TY  - JOUR
AU  - Perotti, Roberto
TI  - In Search of the Transmission Mechanism of Fiscal Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13143
PY  - 2007
Y2  - June 2007
DO  - 10.3386/w13143
UR  - http://www.nber.org/papers/w13143
L1  - http://www.nber.org/papers/w13143.pdf
N1  - Author contact info:
Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
M1  - published as Roberto Perotti. "In Search of the Transmission Mechanism of Fiscal Policy," in Daron Acemoglu, Kenneth Rogoff and Michael Woodford, editors, "NBER Macroeconomics Annual 2007, Volume 22" University of Chicago Press (2008)

M3  - presented at "22nd  Annual Conference on Macroeconomics", March 30-31, 2007
AB  - Most economists would agree that a hike in the federal funds rate will cause some slowdown in growth and inflation, and that the bulk of the empirical evidence is consistent with this statement. But perfectly reasonable economists can and do disagree even on the basic effects of a shock to government spending on goods and services: neoclassical models predict that private consumption and the real wage will fall, while some neo-keyenesian models predict the opposite. This paper discusses alternative time series methodologies to identify government spending shocks and to estimate their effects. Applying these methodologies to data from the US and three other OECD countries provides little evidence in favor of the neoclassical predictions. Using the US input-output tables, the paper then turns to industry-level evidence around two major military buildups to shed light on the effects of government spending shocks.
ER  -