This paper examines how fiscal shocks in a given country affect foreign regions through regional trade linkages. Applying the local projection method to a panel of 222 NUTS-2 regions in 20 European countries during the period 1993–2020, we find that countries-to-regions fiscal spillovers are positive, statistically significant, persistent, and non-negligible in size. In addition, fiscal spillovers tend to be larger when the recipient region experiences a recession, when monetary policy of the recipient country is at the zero-lower-bound, and when the recipient region and the source country are both part of the European Monetary Union.
Bettarelli L., Furceri D., Pizzuto P., Yarveisi K. (2023). Regional fiscal spillovers: The role of trade linkages. JOURNAL OF INTERNATIONAL MONEY AND FINANCE, 140 [10.1016/j.jimonfin.2023.102995].
Regional fiscal spillovers: The role of trade linkages
Bettarelli L.;Furceri D.
;Pizzuto P.;Yarveisi K.
2023-11-11
Abstract
This paper examines how fiscal shocks in a given country affect foreign regions through regional trade linkages. Applying the local projection method to a panel of 222 NUTS-2 regions in 20 European countries during the period 1993–2020, we find that countries-to-regions fiscal spillovers are positive, statistically significant, persistent, and non-negligible in size. In addition, fiscal spillovers tend to be larger when the recipient region experiences a recession, when monetary policy of the recipient country is at the zero-lower-bound, and when the recipient region and the source country are both part of the European Monetary Union.File | Dimensione | Formato | |
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