Working Paper

Effects of Fiscal Policy Shocks in an Open Economy : Evidence from Canada

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collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Belinga, Vincent
dc.date.accessioned
2016-05-04T21:11:52Z
dc.date.available
2016-05-04T21:11:52Z
dc.date.issued
2016-04
dc.date.lastModified
2021-04-23T14:04:20Z
dc.description.abstract
What is the impact of fiscal policy shocks on key macroeconomic variables in Canada? This question triggered renewed interest in the aftermath of the 2008-09 Great Recession. Indeed, as in many advanced economies, fiscal policy in Canada following the recession started with an expansionary phase to boost domestic demand. It progressed to an adjustment phase to reduce public debt and ensure long-term fiscal sustainability and sustained growth. This paper analyzes the effects of fiscal policy shocks on the Canadian economy, building on the sign-restrictions-VAR approach. Unlike previous studies, this paper explicitly accounts for spillovers from the U.S., Canada's main trading partner, and for oil price fluctuations. The findings show that the size and sign of the spending and tax revenue multipliers depend on whether the analysis controls for the exogenous factors. The tax-cut multiplier varies between 0.2 and 0.5, while the spending multiplier ranges between 0.2 and 1.1; the spending multiplier tends to be larger than the tax-cut multiplier over the past two decades.
en
dc.identifier
http://documents.worldbank.org/curated/en/2016/04/26285651/effects-fiscal-policy-shocks-open-economy-evidence-canada
dc.identifier.uri
http://hdl.handle.net/10986/24229
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 7654
dc.rights
CC BY 3.0 IGO
dc.rights.holder
World Bank
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
FORECASTS
dc.subject
MONETARY POLICY
dc.subject
DURABLE GOODS
dc.subject
OIL PRICE
dc.subject
FREE TRADE AGREEMENT
dc.subject
MULTIPLIERS
dc.subject
LAGS
dc.subject
SUPPLY CURVE
dc.subject
INCOME
dc.subject
INTEREST
dc.subject
EXPECTATIONS
dc.subject
BUSINESS INVESTMENT
dc.subject
REAL EXCHANGE RATES
dc.subject
GOVERNMENT SPENDING
dc.subject
INFORMATION FLOWS
dc.subject
INTEREST RATE
dc.subject
EXCHANGE
dc.subject
REAL GDP
dc.subject
SPENDING
dc.subject
ECONOMIC DEVELOPMENTS
dc.subject
PERPETUITY
dc.subject
SERVICES
dc.subject
EXPORTS
dc.subject
REVENUES
dc.subject
FISCAL POLICY
dc.subject
TAX CHANGES
dc.subject
VARIABLES
dc.subject
PRICE
dc.subject
TAX
dc.subject
INCOME TAX
dc.subject
RESERVE
dc.subject
FREE TRADE
dc.subject
CORPORATE INCOME TAX
dc.subject
INTERNATIONAL BANK
dc.subject
ECONOMIC OUTLOOK
dc.subject
BUDGET
dc.subject
TAX CUTS
dc.subject
PUBLIC POLICY
dc.subject
TRADE BALANCE
dc.subject
OIL PRICES
dc.subject
GLOBAL ECONOMY
dc.subject
ADVANCED ECONOMIES
dc.subject
GROSS DEBT
dc.subject
RESERVE BANK
dc.subject
EXOGENOUS VARIABLES
dc.subject
CORPORATE INCOME TAXES
dc.subject
EXCHANGE RATES
dc.subject
TRADING
dc.subject
BASE YEAR
dc.subject
ECONOMETRICS
dc.subject
RECURRENT EXPENDITURES
dc.subject
GLOBALIZATION
dc.subject
DEBT
dc.subject
NET EXPORTS
dc.subject
PRIVATE INVESTMENT
dc.subject
RETURN
dc.subject
BUSINESS CYCLE
dc.subject
OPEN ECONOMY
dc.subject
INTERNATIONAL ECONOMICS
dc.subject
LABOR
dc.subject
TAX REVENUES
dc.subject
INVENTORIES
dc.subject
MONETARY AUTHORITIES
dc.subject
CORPORATE TAX
dc.subject
PUBLIC INVESTMENT
dc.subject
TAXES
dc.subject
EXPENDITURE
dc.subject
UNEMPLOYMENT
dc.subject
INCOME TAXES
dc.subject
CONSUMPTION
dc.subject
FEDERAL RESERVE
dc.subject
AGGREGATE SUPPLY
dc.subject
FEDERAL RESERVE BANK
dc.subject
VOLATILITY
dc.subject
CAPITAL MOBILITY
dc.subject
UNEMPLOYMENT RATE
dc.subject
FUTURE
dc.subject
VALUE
dc.subject
COMPETITIVENESS
dc.subject
TAX INCREASES
dc.subject
FEDERAL BUDGET
dc.subject
MACROECONOMICS
dc.subject
NATIONAL INCOME
dc.subject
AGGREGATE DEMAND
dc.subject
EXPENDITURES
dc.subject
ECONOMY
dc.title
Effects of Fiscal Policy Shocks in an Open Economy
en
dc.title.subtitle
Evidence from Canada
en
dc.type
Working Paper
en
okr.crossref.title
Effects of Fiscal Policy Shocks in an Open Economy: Evidence from Canada
okr.date.disclosure
2016-04-27
okr.doctype
Publications & Research
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.docurl
http://documents.worldbank.org/curated/en/2016/04/26285651/effects-fiscal-policy-shocks-open-economy-evidence-canada
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-7654
okr.identifier.externaldocumentum
090224b0842d463f_1_0
okr.identifier.internaldocumentum
26285651
okr.identifier.report
WPS7654
okr.imported
true
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2016/04/27/090224b0842d463f/1_0/Rendered/PDF/Effects0of0fis0evidence0from0Canada.pdf
en
okr.region.country
Canada
okr.topic
Macroeconomics and Economic Growth :: Economic Growth
okr.topic
Macroeconomics and Economic Growth :: Fiscal & Monetary Policy
okr.topic
Macroeconomics and Economic Growth :: Business Cycles and Stabilization Policies
okr.topic
Macroeconomics and Economic Growth :: Economic Conditions and Volatility
okr.unit
Macroeconomics and Fiscal Management Global Practice Group

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