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Title: Effects of fiscal consolidation on business confidence in the Euro area
Authors: Michail, Nektarios 
Savva, Christos S. 
Koursaros, Demetris 
Keywords: Fiscal shocks;Favar;Expectations
Category: Economics and Business
Field: Social Sciences
Issue Date: Jun-2018
Source: Economics and Business Letters, 2018, Volume 7, Issue 2, Pages 76-83
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: 22544380
DOI: 10.17811/ebl.7.2.2018.76-83
Rights: © 2018, Oviedo University Press.
Type: Article
Appears in Collections:Άρθρα/Articles

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