The asymmetric government spending multipliers: Evidence from US regions

Jiajun Lu and Yueteng Zhu

Economics Letters, 2021, vol. 208, issue C

Abstract: This paper tests the asymmetry in government spending multipliers using the panel data in the US postwar states. Empirical results show that output and employment rate respond asymmetrically to military procurement spending shocks with different signs and magnitudes. Our findings suggest that expansionary multipliers are much larger than contractionary multipliers, and that small-scale spending shocks tend to have a greater impact than large-scale ones.

Keywords: Government spending; Asymmetric effect; Multiplier; Economic output (search for similar items in EconPapers)
JEL-codes: E62 H57 O23 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:208:y:2021:i:c:s0165176521003335

DOI: 10.1016/j.econlet.2021.110056

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