TY - BOOK ID - 134485540 TI - Why Do Fiscal Multipliers Depend on Fiscal Positions? AU - Huidrom, Raju. AU - Kose, Ayhan. AU - Lim, Jamus Jerome. AU - Ohnsorge, Franziska Lieselotte. PY - 2019 PB - Washington, D.C. : The World Bank, DB - UniCat KW - Business Cycle KW - Economic Adjustment and Lending KW - Economic Policy, Institutions and Governance KW - Finance and Financial Sector Development KW - Financial Crisis Management and Restructuring KW - Fiscal and Monetary Policy KW - Fiscal Multipliers KW - Fiscal Position KW - Interest Rate Channel KW - Macroeconomic Management KW - Macroeconomics and Economic Growth KW - Public Sector Development KW - Ricardian Channel KW - State-Dependency UR - https://www.unicat.be/uniCat?func=search&query=sysid:134485540 AB - The fiscal position can affect fiscal multipliers through two channels. Through the Ricardian channel, households reduce consumption in anticipation of future fiscal adjustments when fiscal stimulus is implemented from a weak fiscal position. Through the interest rate channel, fiscal stimulus from a weak fiscal position heightens investors' concerns about sovereign credit risk, raises economy-wide borrowing cost, and reduces private domestic demand. The paper documents empirically the relevance of these two channels using an Interactive Panel Vector Auto Regression model. It finds that fiscal multipliers tend to be smaller when fiscal positions are weak than strong. ER -