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Citation Information

Type Working Paper - ZEW-Centre for European Economic Research Discussion Paper
Title The effects of countercyclical fiscal policy: Firm-level evidence from temporary consumption tax cuts in Turkey
Issue 12-082
Publication (Day/Month/Year) 2012
URL http://www.econstor.eu/bitstream/10419/67406/1/732055032.pdf
There is a long-standing debate in economics about whether governments should engage in
Keynesian-style countercyclical fiscal policy. During the recent global financial crisis, this debate
has gained new momentum as many countries implemented fiscal stimulus packages. A prime
reason for this was the fact that conventional monetary policy as an instrument for stabilization
was no longer sufficient or feasible in an environment where interest rates had hit historically
low levels in many countries. The objective of this paper is to re-visit the effectiveness of such
stabilization policies, in particular of a reduction in consumption taxes, using a difference-in-
difference approach in combination with firm-level data that exploits a temporary consumption
tax cut in Turkey during the recent crisis.

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