fiscal policy multipliers, international policy spillovers, openness and trade liberalisation, panel data

Fiscal Spillovers and Trade Relations in Europe

This paper explores the impact of openness, as measured by import penetration, on the size and duration of fiscal multipliers and spillovers across European Union members. The analysis is embedded in a macroeconomic model, NiGEM, to capture structural differences across countries, time and policy regimes. Panel estimation with PMG and CCE techniques is used to estimate trade relations. Our analysis indicates that fiscal multipliers and spillovers depend crucially on structural assumptions about policy and the formation of expectations.