JOINT VIENNA MACROECONOMICS SEMINAR	INVITATION
R E M I N D E R The Joint Vienna Institute and the Institute for Advanced Studies cordially invite you to the following Joint Vienna Macroeconomics Seminar Tuesday, April 4, 2017 Institute for Advanced Studies Josefstädter Straße 39, 1080 Vienna Seminar Room SE 101, 1^st floor 5:00 pm Pontus Rendahl University of Cambridge Deconstructing the Fiscal Multiplier Abstract: The fiscal multiplier is not a parameter, but the equilibrium outcome of several simultaneously operating mechanisms. In particular, the recent theoretical literature has emphasized the role of expectations as the key channels that determines the efficacy of countercyclical government spending. Using an expectations augmented structural vector autoregression (SVAR), this paper assesses the extent to which expectations of future output and inflation may explain the presence, and size, of a fiscal multiplier. Using several identification procedures and a wide range of decomposition techniques, our results can be summarized as follows: First, a rise in government spending is associated with a persistent rise in both output and expected output, as well as a decline in inflation and expected inflation. Second, the rise in output is largely attributable to the rise in expected output, while the role of expected inflation plays a negligible role. Lastly, using several counterfactual experiments, we find that the rise in expected output is a large causal determinant of the efficacy of fiscal policy, while expected inflation is not. Our results are broadly supportive of the transmission mechanisms identified in the theoretical literature, but emphasizes the role of expected output to a much larger extent than previously acknowledged. Joint work with Saleem Bahaj We are looking forward to seeing you! IHS Institute for Advanced Studies Josefstädter Straße 39, 1080 Vienna, Austria Tel.: +43 1 599 91 - 0 e-Mail: economics@ihs.ac.at http://www.ihs.ac.at		LINKS DIRECTIONS TO IHS on Google maps JOINT VIENNA MACRO SEMINAR on Google calendar ECONOMICS SEMINARS IN VIENNA on Google calendar
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