Jaimovich, Dany (contributor); Panizza, Ugo (contributor) - 2007
There is a large literature showing that fiscal policy is either acyclical or countercyclical in industrial countries … on fiscal policy and hence cannot be used to estimate policy reaction functions. The paper proposes a new instrument for … GDP growth and shows that, once GDP growth is properly instrumented, procyclicality tends to disappear. -- Fiscal Policy …