Reconstruction multipliers

Riccardo Trezzi and Francesco Porcelli

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: A law issued to allocate reconstruction grants following the 2009 "Aquilano" earthquake has resulted in a large and unanticipated discontinuity across municipalities with comparable damages. Using diff-in-diff analysis we estimate the "local spending" and the "local tax" multipliers--according to the composition of the stimulus--controlling for the negative supply shock generated by the event. The stimulus prevented a fall in economic activity and the multiplicative effects of tax cuts are estimated much higher than those of spending. Our results underline the importance of countercyclical fiscal interventions and suggest the most effective composition of such a stimulus.

Keywords: Natural disasters; fiscal multipliers; Mercalli scale (search for similar items in EconPapers)
JEL-codes: C36 E62 H70 (search for similar items in EconPapers)
Date: 2016-08-24
New Economics Papers: this item is included in nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Reconstruction Multipliers (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1649

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