Reexamining asymmetric effects of monetary and government spending policies on economic growth using quantile regression

Macroeconomic data for G7 countries during 1959–2005 were analyzed to examine the asymmetric effects of monetary and government spending policies on economic growth. A key feature of this study is analysis of the changing distribution of real GDP across countries and over time by quantile regression (QR) model and comparison of the results with OLS and LAD estimates. The empirical results of this model differ from those obtained by OLS and LAD estimates since the QR method processes more information from the sample distribution. The nonlinearities derived from conditional QR revealed considerable differences, including differences in sign and in the magnitude of the two government policies on real output across various business cycle stages.