Ethan Ilzetzki’s research focuses on the macroeconomics of fiscal policy. His work combines both theory and empirical studies in an attempt to shed light on the conduct and effects of fiscal policy, with a particular interest in the fiscal policy in developing countries.
Examples of Ethan’s recent research include his study ‘Rent-Seeking Distortions and Fiscal Procyclicality’, which combines macroeconomic methods with insights from political economy with the aim of explaining the behavior of fiscal policymakers in developing countries. His research ‘How Big (Small?) are Fiscal Multipliers?’ (with Carlos A. Vegh and Enrique E. Mendoza) shows that fiscal policy can be very effective in closed economies and those with fixed exchange rates, but is not as potent in open countries and those with flexible exchange rates. It also demonstrates that fiscal policy can be counterproductive in highly indebted developing countries, and that government investment is a more potent fiscal tool than other forms of government spending.