THE EFFECTS OF FISCAL POLICY SHOCKS IN SVAR MODELS: A GRAPHICAL MODELLING APPROACH |
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Authors: | Matteo Fragetta Giovanni Melina |
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Institution: | 1. Univesity of Salerno;2. University of London;3. University of Surrey |
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Abstract: | We apply graphical modelling (GM) 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 – GM 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. |
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