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Subject: search.filters.subject.Fiscal policy

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    Trans-Tasman transmission of fiscal shocks : a thesis submitted in partial fulfilment of the requirements for the Master of Business Studies (Financial Economics) at Massey University, Albany
    (Massey University, 2006) Bodle, Michael
    This paper investigates how shocks to government spending and income taxes in Australia affects both Australia and New Zealand economies and looks at the channels through which these effects are transmitted from one economy to the other. A semi-structural vector auto regressive (VAR) approach is used to analyse quarterly data from the period: 1974:3 – 2005:4. The empirical results show that a shock to Australian income tax revenues leads to a decrease in both Australian and New Zealand output, and a shock to Australian government consumption leads to an increase in both Australian and New Zealand output. The impact of government expenditure shocks is transmitted through the interest rate channel only. The empirical results also suggest that the impact of an income tax shock is transmitted through the interest rate channel, which dominates the effect of the exchange rate channel.
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    Explaining the cross-country variation in fiscal multipliers : a Bayesian approach : a thesis presented in partial fulfillment of the requirements for the degree of Master of Business Studies in Financial Economics at Massey University, Albany, New Zealand
    (Massey University, 2007) Purushothman, Nanda Kishora
    The effectiveness of fiscal policy is subject to crowding out. For nearly thirty years of annual economic data, we find that the crowding out of fiscal policy occurs through interest rate and exchange rate channels. The three most important determinants affecting the size and sign of fiscal multipliers during recessions worldwide are: (i) exchange rate regime, (ii) monetary policy, and (iii) current account balance. We find statistically significant results that these accompanying policies are the most influential sources of the cross-country variation in fiscal multipliers. Similarly, using an OECD dataset examining both economic expansions and recessions, we find that the three most statistically significant variables affecting fiscal multipliers in this case are: (i) exchange rate stance, (ii) private investment, and (iii) monetary policy. We find that the coefficient of the private investment variable is significantly negative, which is in line with the theoretical predictions. This finding is consistent with the hypothesis that expansionary government spending financed by debt crowds out private investment through rising interest rates.
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    On the drivers of fiscal consolidation attempts : a Bayesian approach : a thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Economics at Massey University
    (Massey University, 2011) Mueller, Matthias
    In this paper we investigate which factors determine successful fiscal consolidation attempts. The literature on fiscal consolidation suggests a variety of fiscal, macroeconomic and political factors that are likely to influence the success rate of fiscal adjustment attempts. We focus on 31 of these aspects, as independent variables, and analyse their influence on a binary dependent success variable in a Bayesian model averaging framework for generalised linear models. The applied dataset includes 18 OECD countries and comprises the time period from 1975 to 2009. Bayesian model averaging estimates the generalised linear models with the highest posterior probabilities. By applying this method we can test for model uncertainty. As the posterior probabilities for the best models are, however, quite low we emphasise the posterior probabilities of the individual variables being included in the model. We find that the three variables that control for government social spending, the monetary stance and the formation of the government are highly likely to be included in the best model. Accordingly, a decrease in government social spending, an expansionary monetary policy and a unified government are supportive of successful budget consolidation. These results are mostly in line with findings in the previous research. Finally, several robustness checks confirm that the three variables have a high explanatory power for the dependent success variable.
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    Re-examining the effects of tax policy on economic growth
    (Massey University, 2010) Bosman, Willem
    Using a novel panel dataset of 65 countries for the period 1973-2000, this paper attempts to reconcile the conflicting evidence provided by the current literature on the effects of different tax categories on long-term economic growth. The effects of both top and average, personal and corporate income tax rates as well as the level of tax progressivity on growth are tested while controlling for other possible determinants of growth. The empirical results provide evidence for the distortionary effects of personal income taxes and tax progressivity on long run economic growth, but no robust evidence for any linear effect of corporate tax rates on long term economic growth is found. There is however, evidence for a non-linear effect of corporate taxation on economic performance. The sample splitting estimations also yield thresholds above which progressivity becomes harmful for growth but below which there is no significant effect. The thresholds associated with the respective decades seem to follow the average degree of progressivity rather closely and could be indicative of international tax competition.