Premium
The role of fiscal policy in the St. Louis model: An evaluation and some new evidence
Author(s) -
Raj Baldev,
Siklos Pierre L.
Publication year - 1986
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.3950010306
Subject(s) - distributed lag , salient , economics , fiscal policy , business cycle , lag , macroeconomics , econometrics , monetary economics , political science , computer science , computer network , law
This paper re‐examines the role of high employment budget expenditures (fiscal policy) in the St. Louis expenditure equation by using spectral analysis and the spectral estimates of a two‐sided distributed lag model. The analysis is undertaken with quarterly U.S. data from 1947:1 to 1984:IV in the rate of change form. A salient conclusion is that fiscal policy has statistically significant partial coherences with (nominal) income, with the latter leading the former over the business cycle. We find that income is jointly related to lead terms of fiscal policy in a two‐sided distributed lag model. Some explanations for these results are provided.