The Effects of Government Spending in the Eurozone

Ricardo Duque Gabriel, Mathias Klein () and Ana Sofia Pesso ()
Additional contact information
Mathias Klein: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden
Ana Sofia Pesso: University of Bonn

No 400, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: Using a novel rich dataset at the regional level, this paper provides new empirical evidence on the fiscal transmission mechanism in the Eurozone. Our baseline estimates reveal a government spending relative output multiplier of 2.9, an employment multiplier of 1.9, and a cost per job created of €24,000. Moreover, we find that a regional fiscal stimulus leads to a significant increase in private investment, productivity, durable consumption, and real wages together with a significant rise in total hours worked driven by changes in the extensive margin (total employment), whereas the intensive margin (hours per worker) barely reacts. We estimate only small regional fiscal spillovers but detect notable state dependencies. Regional fiscal multipliers are larger in economic recessions, during fiscal consolidations, and in the core countries of the Eurozone.

Keywords: Fiscal policy; Regional government spending multipliers; Eurozone; ARDECO (search for similar items in EconPapers)
JEL-codes: E32 E62 R12 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2020-12-01
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.riksbank.se/globalassets/media/rapport ... -in-the-eurozone.pdf Full text (application/pdf)

Related works:
Journal Article: The Effects of Government Spending in the Eurozone (2023)
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:hhs:rbnkwp:0400

Access Statistics for this paper

More papers in Working Paper Series from Sveriges Riksbank (Central Bank of Sweden) Sveriges Riksbank, SE-103 37 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Lena Löfgren ().