Bulletin n. 3/2006 | ||
December 2006 | ||
Beetsma Roel , Giuliodori Massimo, Klaassen Franc |
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Trade spill-overs of fiscal policy in the European Union: a panel analysis | ||
in Economic Policy , volume 21 issue 48 , 2006 | ||
We explore international spill-overs from fiscal policy shocks via trade in Europe. To assess and quantify the channels through which a fiscal expansion stimulates domestic activity, foreign exports, and foreign output, we estimate a dynamic empirical model of government spending, net taxes, and output, and combine its estimates with a panel model of trade linkages across European countries. The baseline estimates of both models are quite robust and statistically significant. Our results indicate that trade spill-overs of fiscal shocks should be taken into account when assessing the character and intensity of economic integration in the European Union. | ||