TY - BOOK ID - 11262207 TI - How Effective is Fiscal Policy Response in Systemic Banking Crises? AU - Gupta, Sanjeev. AU - Baldacci, Emanuele. AU - Mulas-Granados, Carlos. AU - International Monetary Fund. PY - 2009 SN - 145191735X 1462382002 9786612843730 1451873077 1282843737 1452786399 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Bank failures KW - Financial crises KW - Costs KW - Econometric models. KW - Crashes, Financial KW - Crises, Financial KW - Financial crashes KW - Financial panics KW - Panics (Finance) KW - Stock exchange crashes KW - Stock market panics KW - Failure of banks KW - Crises KW - Business failures KW - Banks and Banking KW - Financial Risk Management KW - Macroeconomics KW - Public Finance KW - Fiscal Policy KW - Financial Crises KW - Taxation, Subsidies, and Revenue: General KW - Economic & financial crises & disasters KW - Public finance & taxation KW - Fiscal policy KW - Fiscal stimulus KW - Banking crises KW - Revenue administration KW - Revenue KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:11262207 AB - This paper studies the effects of fiscal policy response in 118 episodes of systemic banking crisis in advanced and emerging market countries during 1980-2008. It finds that timely countercyclical fiscal measures contribute to shortening the length of crisis episodes by stimulating aggregate demand. Fiscal expansions that rely mostly on measures to support government consumption are more effective in shortening the crisis duration than those based on public investment or income tax cuts. But these results do not hold for countries with limited fiscal space where fiscal expansions are prevented by funding constraints. The composition of countercyclical fiscal responses matters as well for output recovery after the crisis, with public investment yielding the strongest impact on growth. These results suggest a potential trade-off between short-run aggregate demand support and medium-term productivity growth objectives in fiscal stimulus packages adopted in distress times. ER -