Fiscal policy transmission mechanisms
Abstract
The effect of fiscal policy over business cycles has been a source of major controversy
despite the growing empirical literature and international experience. This paper proposes
an analytical framework that allows us to analyze the transmission channels of fiscal
policy, updating the most recent findings after the pandemic. In this way, it aims to contribute
to a more detailed understanding of some of the main mechanisms by which fiscal policy
affects the economy.
JEL Classification: E32; E63; H62.
Keywords: Fiscal policy fiscal multipliers interest rates investments