Hidden Bibliographic Details
| Other authors / contributors: | Shik Kang, Joong, author.
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| ISBN: | 1282447785
9781282447783
9781451989007
1451989008
1462311466
9781462311460
1452723907
9781452723907
9786613820983
6613820989
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| ISSN: | 2227-8885
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| Notes: | Includes bibliographical references.
Restrictions unspecified
Electronic reproduction. [S.l.] : HathiTrust Digital Library, 2010.
Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212
English.
digitized 2010 HathiTrust Digital Library committed to preserve
Print version record.
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| Summary: | This paper evaluates the bias of the least-squares-with-dummy-variables (LSDV) method in fiscal reaction function estimations. A growing number of studies estimate fiscal policy reaction functions-that is, relationships between the primary fiscal balance and its determinants, including public debt and the output gap. A previously unexplored methodological issue in these estimations is that lagged debt is not a strictly exogenous variable, which biases the LSDV estimator in short panels. We derive the bias analytically to understand its determinants and run Monte Carlo simulations to assess its likely size in empirical work. We find the bias to be smaller than the bias of the LSDV estimator in a comparable autoregressive dynamic panel model and show the LSDV method to outperform a number of alternatives in estimating fiscal reaction functions.
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| Other form: | Print version: Celasun, Oya. On the properties of various estimators for fiscal reaction functions. [Washington, D.C.] : International Monetary Fund, ©2006
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| Standard no.: | 10.5089/9781451989007.001
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