Patrick Fève
;
Jean-Guillaume Sahuc

in search of the transmission mechanism of fiscal policy in the euro area (replication data)

This paper applies the DSGE-VAR methodology to assess the size of fiscal multipliers in the data and the relative contributions of two transmission mechanisms of government spending shocks, namely hand-to-mouth consumers and Edgeworth complementarity. Econometric experiments show that a DSGE model with Edgeworth complementarity is a better representation of the transmission mechanism of fiscal policy as it yields dynamic responses close to those obtained with the flexible DSGE-VAR model (i.e.ÿan impact output multiplier larger than one and a crowding-in of private consumption). The estimated share of hand-to-mouth consumers is too small to replicate the positive response of private consumption.

Data and Resources

Suggested Citation

Fève, Patrick; Sahuc, Jean-Guillaume (2017): In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area (replication data). Version: 1. Journal of Applied Econometrics. Dataset. http://dx.doi.org/10.15456/jae.2022326.0702748022