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Seminar in Macroeconomics (MW21.7)

Teacher: Prof. Dr. M. Wolters
Participants: M.Sc. in Economics

Fiscal Stabilization Policy

The global financial crisis has led to two waves of strong fiscal policy actions. First, countries facing deep recessions tried to counteract these with massive fiscal stimuli. The effectiveness of such fiscal expansions has been widely debated and a large literature has evolved that tries to quantify the effects of these expansionary fiscal measures using empirical methods as well as theory based macroeconomic models. The second wave of fiscal policy actions started as public debt in many countries spiralled upwards. This second wave contained mostly austerity measures.

These developments have led to heated debates among academics and policymakers and have triggered the development of many interesting research papers. One key question is the size of the fiscal multiplier which might depend on a number of issues. In particular the joint effects of fiscal and monetary policy when interest rates approach the zero lower bound might play an important role for the fiscal multiplier. Furthermore, the question whether the effects of fiscal policy depend on the current state of the business cycle has been investigated. Additionally, the choice of fiscal policy instruments such as changes in government consumption, government investment, transfer payments or adjustments in different tax rates is important.

These and some other topics concerning the first and second wave of fiscal policy actions are listed below. In this seminar we will discuss research papers at the frontier
of the on-going debate.

For more information see here.

You can find a sample seminar paper here, and the guidelines of the chair here.

Grade ratio: The grade for the course will depend on the seminar paper (50%), two-page handout
(10%) presentation (30%) and participation (10%).

Preliminary meeting: July 5, 14.00 pm, room 4.157

Handing-in of essay and two-page handout: October 29, via Email to Ms. Steinborn

Presentation: block seminar on November 10/11, 8.00 am to 6.00 pm in TBA.