Afonso, AntónioSousa, Ricardo M.2022-09-282022-09-282012Afonso, António and Ricardo M. Sousa. (2012). "The macroeconomic effects of fiscal policy" .Applied Economics, Vol. 44, No. 34: pp. 4439-4454.1466–4283 (Online)http://hdl.handle.net/10400.5/25611We investigate the macroeconomic effects of fiscal policy using a Bayesian Structural Vector Autoregression (B-SVAR) approach. We identify fiscal policy shocks via a partial identification scheme, but also: (i) include the feedback from government debt; (ii) look at the impact on the composition of output; (iii) assess the effects on asset markets; (iv) use quarterly data; and (v) analyse empirical evidence from the US, the UK, Germany and Italy. The results show that government spending shocks, in general, have a small effect on Gross Domestic Product (GDP); lead to important ‘crowding-out’ effects; have a varied impact on housing prices and generate a quick fall in stock prices. Government revenue shocks generate a mixed effect on housing prices and a small and positive effect on stock prices. The empirical evidence also suggests that it is important to explicitly consider the government debt dynamics in the model.engFiscal PolicyBayesian Structural VARjournal article10.1080/00036846.2011.591732