The Korean Economic Review
International Fiscal Spillovers: A Review Essay
Michael B. Devereux (University of British Columbia)Year 2018Vol. 34No. 1
This paper provides a review of the empirical literature on fiscal multipliers andinternational fiscal spillovers. We discuss the various empirical methodologies employed inmeasuring spillovers, and the degree to which estimated spillovers depend on the state of thebusiness cycle, the stance of monetary policy, the exchange rate regime, and other factors. Inan environment where monetary policy is constrained by the zero bound, both fiscalmultipliers and international fiscal spillovers are likely to be much larger than in normaltimes. In general, this prediction is supported in the empirical literature.