The Effectiveness of Government Expenditures during Crisis: Evidence from Regional Government Spending in Japan 1990-2000

Markus Brückner and Anita Tuladhar
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Anita Tuladhar: International Monetary Fund

No 2011-10, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: We use a rich dataset of regional government expenditures for Japan during the 1990-2000 period to estimate from within-prefecture variation the multiplier of government investment and government consumption expenditures. Our main finding is that government spending did not have multipliers effects that are on average larger than one. Government investment had a positive and significant effect on output that was quantitatively larger than the effect of government consumption expenditures. Government personnel expenditures and transfers to households had significant negative output effects while transfers to firms produced positive multiplier effects that were significantly larger than one. Our findings are consistent with macro model that emphasize the supplyside effects of fiscal policy during times of financial crisis.

Keywords: fiscal policy; fiscal multipliers (search for similar items in EconPapers)
JEL-codes: E62 H30 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2011-02
New Economics Papers: this item is included in nep-cba, nep-cis, nep-fdg, nep-mac and nep-pbe
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2011-10

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