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Title: Effects of fiscal consolidation on business confidence in the Euro area
Authors: Michail, Nektarios A. 
Savva, Christos S. 
Koursaros, Demetris 
Major Field of Science: Social Sciences
Field Category: Economics and Business
Keywords: Fiscal shocks;Favar;Expectations
Issue Date: Jun-2018
Source: Economics and Business Letters, 2018, vol. 7, no. 2, pp. 76-83
Volume: 7
Issue: 2
Start page: 76
End page: 83
Journal: Economics and Business Letters 
Abstract: We employ a factor-augmented VAR (FAVAR) covering both domestic and international developments to examine the confidence effects of a fiscal shock, using a sample of six euro area countries. The results indicate that following a shock in total government expenditure, responses are country-specific, while a weak geographical pattern, i.e. a distinction between core and periphery countries can be observed. Overall, the confidence response is short-lived and returns to zero after a few quarters. Heterogeneity in country responses also indicates that the Bachmann and Sims (2012) conclusion suggesting the endogenous response of confidence can explain almost all of the fiscal-driven output expansion in recessions, may hold only in country-specific cases.
ISSN: 2254-4380
DOI: 10.17811/ebl.7.2.2018.76-83
Rights: © N. Michail et al.
Type: Article
Collaboration : Cyprus University of Technology 
Appears in Collections:Άρθρα/Articles

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