NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Fiscal Policy in the Aftermath of 9/11

Martin Eichenbaum, Jonas Fisher

NBER Working Paper No. 10430
Issued in April 2004
NBER Program(s):   EFG   ME   PE

This paper investigates the nature of U.S. fiscal policy in the aftermath of 9/11. We argue that the recent dramatic fall in the government surplus and the large fall in tax rates cannot be accounted for by either the state of the U.S. economy as of 9/11 or as the typical response of fiscal policy to a large exogenous rise in military expenditures. Our evidence suggests that, had tax rates responded in the way they `normally' do to large exogenous changes in government spending, aggregate output would have been lower and the surplus would not have changed by much. The unusually large fall in tax rates had an expansionary impact on output and was the primary force underlying the large decline in the surplus. Our results do not bear directly on the question of whether the decline in tax rates and the decline in the surplus after 9/11 were desirable or not.

download in pdf format
   (387 K)

email paper

This paper is available as PDF (387 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10430

Published: Eichenbaum, Martin & Fisher, Jonas D M, 2005. "Fiscal Policy in the Aftermath of 9/11," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 1-22, February. citation courtesy of

Users who downloaded this paper also downloaded these:
Burnside, Eichenbaum, and Fisher w9772 Fiscal Shocks and Their Consequences
Ramey w15464 Identifying Government Spending Shocks: It's All in the Timing
Edelberg, Eichenbaum, and Fisher w6737 Understanding the Effects of a Shock to Government Purchases
Perotti w13143 In Search of the Transmission Mechanism of Fiscal Policy
Mountford and Uhlig w14551 What are the Effects of Fiscal Policy Shocks?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About
Support

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us