Temporary and permanent government spending in a small open economy

Karayalçın, Cem

doi:10.1016/s0304-3932(98)00044-0

Cited by 13 publications

(10 citation statements)

References 12 publications

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“…While it is agreed that transitory contractionary monetary shocks lead to a transitory increase in the real interest rate (Christiano et al, 2000), the empirical evidence on transitory contractionary spending shocks supports both temporary declines in the real interest rate and no significant effects (Karayalçin, 1999). Now recall that four out of the six Opportunity Cost View cases were found for contractionary spending shocks, which seems to agree with the Opportunity Cost View.…”

Section: Summary Of Results and Interpretationsmentioning

confidence: 80%

Demand shocks and productivity growth

Menezes

2005

PEJ

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This paper presents evidence on the relationship between cyclical shocks and productivity growth, for 20 2-digit SIC US manufacturing industries and a set of monetary policy, fiscal policy, and oil price shocks. The paper uses as a measure of productivity change a Solow residual corrected for a wide range of non-technological effects due to imperfect-competition, non-constant returns to scale, and cyclical utilization rates of capital and labor services. The empirical framework identifies policy shocks independently of productivity measurement issues via a two-step procedure. While the typical industry shows weak responses of productivity to the shocks considered, in some industries temporary contractionary policy shocks lead to increases in productivity. In addition, the results reveal that there are localized asymmetries, with contractionary policy shocks having larger productivity effects than their expansionary counterparts. The results support the thesis that job reallocation is an important channel linking contractionary policy shocks and productivity growth. These results support the pit-stop view of downturns. Copyright Springer-Verlag Berlin/Heidelberg 2005

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Section: Summary Of Results and Interpretationsmentioning

confidence: 80%

Demand shocks and productivity growth

Menezes

2005

PEJ

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“…One consequence of this is that the real interest rate will freely adjust in the long-run. Another consequence is that policies will not be hysteretic; on this see Karayalcin (1999).…”

Section: Characterization Of the Equilibriummentioning

confidence: 99%

Habit formation, adjustment costs, and international transmission of fiscal policy

Gonzalez-Hernandez

Karayalçın

2013

Journal of International Money and Finance

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“…Applications to general-equilibrium models of closed economies include Fisher and Turnovsky (1992) and Turnovsky and Fisher (1995), both of which focused on government expenditure shocks. Applications to the open economy include Sen and Turnovsky (1990), Turnovsky and Sen (1991), Fisher (1995), Brock (1996), Karayalcin (1999), van de Klundert and Smulders (1999), and Schubert and Turnovsky (2002). These papers have considered an extensive range of shocks, including government expenditure, investment tax credit, foreign interest rate, tariffs, transfers and regulations.…”

Section: Introductionmentioning

confidence: 99%

Anticipated Fiscal Policy Changes and Goods Market Adjustments

Schubert

Turnovsky

2006

German Economic Review

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Government policies are frequently known to be temporary and thus their termination is perfectly anticipated. These foreseen policy changes must be consistent with equilibrium in both the goods market and asset markets. Potential problems arise because prices often play dual roles, both as final goods prices, and as asset prices, as components of rates of return. We show how the economy accommodates an anticipated policy change depends upon its production flexibility and its structure. With flexible investment, an anticipated reduction in government expenditure is fully accommodated by capital accumulation. When investment involves adjustment costs, the marginal utility of wealth and the price of capital both jump so as to maintain equality among rates of return. Goods market clearance is maintained by a combination of increases in consumption and investment. Extensions of the model to include inventories and to a small open economy are also considered and contrasted. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.

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Temporary and permanent government spending in a small open economy

Cited by 13 publications

References 12 publications

Demand shocks and productivity growth

Demand shocks and productivity growth

Habit formation, adjustment costs, and international transmission of fiscal policy

Anticipated Fiscal Policy Changes and Goods Market Adjustments

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