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Fiscal Policy Effectiveness in the Banking Crisis

Published online by Cambridge University Press:  26 March 2020

Ray Barrell ,
Tatiana Fic  and
Iana Liadze
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Abstract

We investigate the effects of changes in taxes using the National Institute international macro model, NiGEM. A comparison on fiscal impulses worth 1 per cent of GDP for one year is made, with a comparison of a direct tax change, indirect tax change, and a lump sum payment. Multipliers are assessed one country at a time and when policy is coordinated to increase its impacts. We look at the importance of releasing borrowing constraints in a banking crisis. The analysis assumes financial and foreign exchange markets are forward looking.

Type
Articles
Information
National Institute Economic Review , Volume 207 , January 2009 , pp. 43 - 50
Copyright
Copyright © 2009 National Institute of Economic and Social Research

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