We develop a model-based, VAR methodology for measuring innovations in monetary policy and their macroeconomic effects. Using this framework, we are able to compare existing approaches to measuring monetary policy shocks and derive a new measure of policy innovations based directly on (possibly...

This paper studies the effects of discretionary fiscal policy on output volatility and economic growth. Using data for 91 countries, we isolate three empirical regularities: (1) governments that use fiscal policy aggressively induce significant macroeconomic instability; (2) the volatility of...