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ON THE LONG-TERM EFFECTS OF FISCAL POLICY IN THE UNITED KINGDOM: THE CASE FOR A GOLDEN RULE.
- Source :
- Scottish Journal of Political Economy; Nov2009, Vol. 56 Issue 5, p580-607, 28p, 3 Charts, 8 Graphs
- Publication Year :
- 2009
-
Abstract
- This paper uses the SVAR methodology to investigate the effects of public investment on GDP and, more specifically, the effects of the introduction of a golden rule of public finance. We extend the existing literature by estimating a model for the British economy that takes into account long-run factors such as public debt accumulation and policy interactions. We find that in such a long-run framework, public investment has a significant and permanently positive effect on GDP; this result runs counter to the most recent literature on the topic using SVAR, which was limited to a short-run specification. We further find, by comparing different subsamples, that the introduction of the golden rule in 1997 strengthened the positive effect of public investment. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00369292
- Volume :
- 56
- Issue :
- 5
- Database :
- Complementary Index
- Journal :
- Scottish Journal of Political Economy
- Publication Type :
- Academic Journal
- Accession number :
- 44414970
- Full Text :
- https://doi.org/10.1111/j.1467-9485.2009.00499.x