Journal article

Authors list: Latifi, Albina; Naboka-Krell, Viktoriia; Tillmann, Peter; Winker, Peter

Publication year: 2024

Journal: European Economic Review

Volume number: 168

ISSN: 0014-2921

eISSN: 1873-572X

Open access status: Hybrid

DOI Link: https://doi.org/10.1016/j.euroecorev.2024.104827

Publisher: Elsevier

Abstract: 
Fiscal policy is made in parliaments. We go to the roots of changes of fiscal policy in Germany and use a novel data set on all parliamentary speeches in the Bundestag from 1960 to 2021. We propose an embedding-based approach, which allows the representation of words and documents in a shared vector space, in order to measure fiscal policy-related sentiment in parliamentary debates at a scale from contractionary to expansionary. We also distinguish between sentiment related to exogenous and endogenous fiscal policy. We put fiscal sentiment into a series of recursively-identified vector autoregressive models to show that a change in fiscal sentiment causes a shift in government spending and has significant effects on the macroeconomy. The results support the notion that the debate in parliament contains information for the identification of government spending shocks.

Harvard Citation style: Latifi, A., Naboka-Krell, V., Tillmann, P. and Winker, P. (2024) Fiscal policy in the Bundestag: Textual analysis and macroeconomic effects, European Economic Review, 168, Article 104827. https://doi.org/10.1016/j.euroecorev.2024.104827

APA Citation style: Latifi, A., Naboka-Krell, V., Tillmann, P., & Winker, P. (2024). Fiscal policy in the Bundestag: Textual analysis and macroeconomic effects. European Economic Review. 168, Article 104827. https://doi.org/10.1016/j.euroecorev.2024.104827