Some stylized facts on non-systematic fiscal policy in the Euro area

Abstract

We derive a set of stylized facts on the effects of non-systematic fiscal policy in the four largest countries of the Euro area. We find relevant differences across countries in the effects of non-systematic fiscal policy, and substantial uncertainty about the size of these effects. Yet, in general, expenditure shocks are usually rather ineffective in increasing output growth, and can require deficit financing. Tax policies also appear to have minor effects on output, but usually tax increases do not have negative effects. Disaggregating expenditures and receipts yields some interesting results, in particular increases in government consumption decrease output in all countries, while social benefits can increase it.