Government Spending Multipliers and Distribution of Commodity Booms in the Spatial Economy

Brian Daza
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Brian Daza: University of Michigan

No 690, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: This paper uses the regional redistribution of PeruÕs government revenueÑincreased due to the mineral commodity price boom in the 2000s -- to estimate the effects of government spending. I begin by calculating local effects on households, workers, and firms, and a local open economy relative multiplier. Motivated by a general equilibrium framework, I then incorporate a Spatial Auto-Regressive (SAR) model to measure trade-related spatial spillovers. I find that increases in government spending stimulate larger relative output growth and positively impact relative wages, expenditures, and income. However, there is no corresponding relative rise in labor or value added. The spatial analysis helps interpret these results and measures the trade-related indirect effects of local spending on output.

Keywords: Fiscal Multiplier; Interregional Trade; Commodity Boom; Spatial Econometrics (search for similar items in EconPapers)
JEL-codes: C31 E62 O13 Q33 R12 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2024-11
New Economics Papers: this item is included in nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:690

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