Economic policy uncertainty and government spending multipliers

Rong Li and Ning Wei

Economics Letters, 2022, vol. 217, issue C

Abstract: We examine the impact of Economic Policy Uncertainty (EPU) on the effectiveness of government spending using a local projection method with an endogenously determined threshold parameter. The empirical analysis reveals that government spending multipliers are larger during low EPU periods compared to those in high EPU periods. This result is robust when government spending shocks are identified using government spending news constructed based on survey of professional forecasters data. Our study calls for policy expectation management as a company effort together with fiscal stimulus.

Keywords: Government spending multiplier; Economic policy uncertainty; Fiscal policy (search for similar items in EconPapers)
JEL-codes: D80 E62 H50 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016517652200235X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:217:y:2022:i:c:s016517652200235x

DOI: 10.1016/j.econlet.2022.110693

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().