The Impact of Fiscal Shocks on the Irish Economy

We study the short-run effects of shocks to government spending on Ireland's output and its real exchange rate. We show that the impact of government spending shocks critically depend on the nature of the fiscal innovation. Our main finding is that there are important differences between shocks...

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Bibliographic Details
Published in:The Economic and social review 2009-12, Vol.40 (4), p.407-434
Main Authors: Bénétrix, Agustín S, Lane, Philip R
Format: Article
Language:English
Subjects:
Economic impact
Economic impact analysis
Effects
Exchange rates
Foreign exchange rates
Government spending
Ireland
Output rate
Public finance
Studies
Tax rates
Tax reform
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Summary:We study the short-run effects of shocks to government spending on Ireland's output and its real exchange rate. We show that the impact of government spending shocks critically depend on the nature of the fiscal innovation. Our main finding is that there are important differences between shocks to public investment and shocks to government consumption. Moreover, within the latter category, shocks to the wage and non-wage components also have dissimilar effects. [PUBLICATION ABSTRACT]
ISSN:0012-9984