Ratto, Marco; Roeger, Werner; Jan in't Veld - Directorate-General Economic and Financial Affairs, … - 2007
countercyclical fiscal policy. Consistent with previous findings, there is a small positive fiscal multiplier in the case of … transitory fiscal shocks. It is found that fiscal policy is effective in stabilising GDP in the presence of demand and supply … shocks. Fiscal policy helps to reduce the demand externality arising from nominal rigidities. In addition automatic …