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The effects of fiscal policy shocks in svar models: A graphical modelling approach

Fragetta, M. & Melina, G. (2011). The effects of fiscal policy shocks in svar models: A graphical modelling approach. Scottish Journal of Political Economy, 58(4), pp. 537-566. doi: 10.1111/j.1467-9485.2011.00558.x


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
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
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