What Determines Government Spending Multipliers?

What Determines Government Spending Multipliers?

4.11 - 1251 ratings - Source

This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to anbsp;...

Title:What Determines Government Spending Multipliers?
Author:Gernot Müller, André Meier, Giancarlo Corsetti
Publisher:International Monetary Fund - 2012-06-01


You Must CONTINUE and create a free account to access unlimited downloads & streaming