Send us your feedback

Thank you for your feedback. An email has been sent to the ESRC support team.

An error occured whilst sending your feedback. Please review the problems below.

The research catalogue is an archive of ESRC-funded grants and outputs. Links, files and other content will no longer be maintained or updated after April 2014.

New Directions in Monetary and Fiscal Policy Analysis at the Macroeconomic Level

Grant reference: RES-062-23-1436

« View grant details

Other Report details

Uncertain fiscal consolidations
In a non-linear New Keynesian economy, we explore the macro-economic consequences of undertaking state-dependent fiscal consolidations of uncertain timing and composition. Following the empirical evidence in Alesina and Ardagna (2010), we place particular emphasis on whether or not the fiscal consolidation is driven by tax rises or expenditure cuts. We find that the composition of the fiscal consolidation, its duration, the monetary policy stance, the level of government debt, the degree of price stickiness, and expectations over the likelihood and composition of fiscal consolidations all matter in determining the extent to which a given consolidation is expansionary and/or successful.

Primary contributor

Author Huixin Bi

Additional contributors

Co-author Eric Leeper
Co-author Campbell Leith

Additional details

02 June 2011