01783cas a2200265 a 4500 AALejournalIMF005772 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451872538 1018-5941 BD-DhAAL BD-DhAAL Muller, Gernot. Fiscal Stimulus with Spending Reversals / Gernot Muller, Giancarlo Corsetti, Andre Meier. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The impact of fiscal stimulus depends not only on short-term tax and spending policies, but also on expectations about offsetting measures in the future. This paper analyzes the effects of an increase in government spending under a plausible debt-stabilizing policy that links current stimulus to a subsequent period of spending restraint. Accounting for such spending reversals brings an otherwise standard new Keynesian model in line with the stylized facts of fiscal transmission, including the crowding-in of consumption and the 'puzzle' of real exchange rate depreciation. Time series evidence for the U.S. supports the empirical relevance of spending reversals. Mode of access: Internet Corsetti, Giancarlo. Meier, Andre. IMF Working Papers; Working Paper ; No. 2009/106 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/106/001.2009.issue-106-en.xml IMF e-Library