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  • Does interest rate influence government spending and taxation : a structural VAR approach
    Krušec, Dejan
    In this paper we estimate on the sample of four OECD countries (Australia, Canada, Great Britain and the USA) whether interest rate shocks have significant impact on government spending and taxing ... decisions by using a structural vector autoregression (sVAR) approach with the mixed institutional information and 'decision lags' approach to the identification of shocks. We want to test whether the government responds to interest rate shocks by increasing or decreasing government spending and taxation significantly, i.e. whether monetary and fiscal policy act as substitutes or as complements and what the timing and magnitude of these responses are. The main findings of the paper are that fiscal and monetary policy acted as substitutes in Australia, Canada and partly in the United States, whereby the degree of substitutability is not higher in the time period from 1960 up to 1980 than in the time period between 1980 and 2001. On the other hand, the evidence for Great Britain shows that fiscal and monetary policy acted more like strategic complements, especially in the period before 1980.
    Vir: Naše gospodarstvo : revija za aktualna gospodarska vprašanja = Our economy : review of current problems in economics. - ISSN 0547-3101 (Let. 49, št. 5/6, 2003, str. 588-618)
    Vrsta gradiva - članek, sestavni del
    Leto - 2003
    Jezik - angleški
    COBISS.SI-ID - 14407654

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