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Fragetta, M. & Gasteiger, E. (2014). Fiscal foresight, limited information and the effects of government spending shocks. Oxford Bulletin of Economics and Statistics. 76 (5), 667-692

M. Fragetta and E. M. Gasteiger,  "Fiscal foresight, limited information and the effects of government spending shocks", in Oxford Bulletin of Economics and Statistics, vol. 76, no. 5, pp. 667-692, 2014

@article{fragetta2014_1732406946864,
	author = "Fragetta, M. and Gasteiger, E.",
	title = "Fiscal foresight, limited information and the effects of government spending shocks",
	journal = "Oxford Bulletin of Economics and Statistics",
	year = "2014",
	volume = "76",
	number = "5",
	doi = "10.1111/obes.12036",
	pages = "667-692",
	url = "http://onlinelibrary.wiley.com/doi/10.1111/obes.12036"
}

TY  - JOUR
TI  - Fiscal foresight, limited information and the effects of government spending shocks
T2  - Oxford Bulletin of Economics and Statistics
VL  - 76
IS  - 5
AU  - Fragetta, M.
AU  - Gasteiger, E.
PY  - 2014
SP  - 667-692
SN  - 0305-9049
DO  - 10.1111/obes.12036
UR  - http://onlinelibrary.wiley.com/doi/10.1111/obes.12036
AB  - We quantify the impact of government spending shocks in the US. Thereby, we control for
fiscal foresight, a specific limited information problem (LIP) by utilizing the narrative
approach. Moreover, we surmount the generic LIP inherent in vector autoregressions
(VARs) by a factor-augmented VAR (FAVAR) approach. We find that a positive deficit-
financed defence shock raises output by more than in a VAR (e.g. 2.61 vs. 2.04 for peak
multipliers). Furthermore, our evidence suggests that consumption is crowded in. These
results are robust to variants of controlling for fiscal foresight and reveal the crucial role
of the LIP in fiscal VARs.
ER  -