Work

Tax Cuts And Interest Rate Cuts: An Empirical Comparison Of The Effectiveness Of Fiscal And Monetary Policy

Year: 2011

Type: article

Abstract: Can expansionary fiscal or monetary policy stimulate the U.S. economy in light of recent events? Using an Error-Correction-Vectorautoregression, we examine the relative effectiveness of both types of governmental stabilization policy. Unlike previous studies, we use a more general error correction vectorautoregression (ECM) approach. Our focus is on determining the relative explanatory power of measures of monetary policy (M2 and the Federal Funds Rate) and fiscal policy (marginal income tax rates and government spending) in explaining movements in consumption, investment, and output. Results suggest that monetary policy is relatively more powerful than fiscal policy.

Source: Journal of Business & Economics Research (JBER)

DOI: 10.19030/jber.v2i8.2906

Authors: Tricia Coxwell Snyder, Donald Bruce

Institutions: William Paterson University, University of Tennessee at Knoxville

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

OpenAlex ID: W2175274757

FWCI: 4.266

Cites: 11

Cited by: 11

Related to: 10