City Research Online

Abstract

We apply graphical modelling theory to identify fiscal policy shocks in SVAR models of the US economy. Unlike other econometric approaches – which achieve identification by relying on potentially contentious a priori assumptions – graphical modelling is a data based tool. Our results are in line with Keynesian theoretical models, being also quantitatively similar to those obtained in the recent SVAR literature à la Blanchard and Perotti (2002), and contrast with neoclassical real business cycle predictions. Stability checks confirm that our findings are not driven by sample selection.

Publication Type:	Article
Additional Information:	This is the accepted version of the following article: Fragetta, M. and Melina, G. (2011), THE EFFECTS OF FISCAL POLICY SHOCKS IN SVAR MODELS: A GRAPHICAL MODELLING APPROACH. Scottish Journal of Political Economy, 58: 537–566, which has been published in final form at http://dx.doi.org/10.1111/j.1467-9485.2011.00558.x
Publisher Keywords:	Fiscal policy, SVAR, graphical modelling
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Departments:	School of Policy & Global Affairs > Economics
SWORD Depositor:	Symplectic Administrator

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