Can Government Purchases Stimulate the Economy?

Valerie Ramey

Journal of Economic Literature, 2011, vol. 49, issue 3, 673-85

Abstract: This essay briefly reviews the state of knowledge about the government spending multiplier. Drawing on theoretical work, aggregate empirical estimates from the United States, as well as cross-locality estimates, I assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate: a temporary, deficit-financed increase in government purchases. I conclude that the multiplier for this type of spending is probably between 0.8 and 1.5. ( JEL E23, E62, H50)

JEL-codes: E23 E62 H50 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/jel.49.3.673
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Citations: View citations in EconPapers (519)

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