Discussion of fiscal policies in the euro area: revisiting the size of spillovers by Mario Alloza, Pablo Burriel and Javier Perez
Discussion of: Fiscal Policies in the Euro Area:
Revisiting the Size of Spillovers
by Mario Alloza, Pablo Burriel and Javier Perez
Sebastian Gechert (IMK)
Bundesbank Fiscal Policy in EMU Workshop, March 2018
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• How strong are ﬁscal multipliers and spillovers within/between
major EA countries
• identify ﬁscal shocks by country via Blanchard and Perotti
(2002) on a quarterly basis
• estimate multipliers and spillovers via parsimonious local
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Novelty / Strengths
• use of a consistent quarterly ﬁscal dataset for several EA
countries → nice for spillovers
• use local projections and bilateral spillovers to calculate
overall spillover eﬀect
• disaggregate gov’t spending components
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• domestic multipliers of gov’t general spending of about 1,
largest for GER
• rather large multipliers for public investment
• predominantly positive spillovers, largest for GER as
destination country, but smallest as country of origin
• spillovers however largely insigniﬁcant at 95% levels
• trade channel important for explanation
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• Why do g responses range about .05-.1 “percent”? Are these
really e 1 shocks as described?
• Then I would have expected a response of 1 for g
• Could this have an impact on the size and accurate weighting
of the spillovers?
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Explaining Eﬀects Through Trade Channel
• Intension is clear and eﬀects on IM and X plausible
• However, what other channels would exist?
e-exchange rate with ROW also reﬂected in IM and X →
disentangle bilateral trade and 3rd-country trade eﬀects to
make a nice contribution
MP reaction (-) or lack thereof (+, through real interest rate
eﬀect) at the ZLB? (Blanchard / Erceg / Linde 2015) → use a
regime-dependent framework? Another nice contribution
• Disentangling of direct (import content of g) vs indirect (AD)
eﬀect. You touch that topic (Fn 17), but could be
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Some minor questions
• Why does the scaling by GDP in eq(5) make it necessary to
include controls? And shouldn’t they be scaled as well?
• How where the sig-levels for multipliers calculated? Via delta
• Eq(10), why shockit = j=i ωijεG×G?
• Why tax multipliers only in appendix and what about their
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• Structural break 1999? Look for some sample split or
interaction term speciﬁcation?
• Fiscal foresight? Not very plausible for spillover eﬀects
• Use panel structure to gain some additional power?
• Discussion of country diﬀerences
Why would GER multipliers be biggest? (most open economy)
Why would country with biggest multipliers produce lowest
spillovers to others?
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