Using State Pension Shocks to Estimate Fiscal Multipliers since the Great Recession

Daniel Shoag

American Economic Review, 2013, vol. 103, issue 3, 121-24

Abstract: Has government spending raised income and employment since 2008? I use new data on state pension returns during the Great Recession to recover exogenous changes in spending. Instrumenting with these return shocks, I estimate that each dollar of windfall-financed spending raised local incomes by $1.43 and every additional $22,011 of spending created one contemporaneous job. These estimates are similar to those found in Shoag (2010) despite the non-overlapping datasets. Unlike Shoag (2010), however, the bulk of the employment increase post-2008 stems from decreases in unemployment rather than increased labor force participation.

JEL-codes: E23 E32 E52 E62 G01 H55 R11 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.3.121
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Citations: View citations in EconPapers (49)

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