EconPapers    
Economics at your fingertips  
 

Historical evidence for larger government spending multipliers in uncertain times than in slumps

Pascal Goemans

Economic Inquiry, 2022, vol. 60, issue 3, 1164-1185

Abstract: We investigate whether US government spending multipliers are higher during periods of heightened uncertainty or economic slumps as opposed to normal times. Using quarterly data from 1890 onward and local projections, we estimate a cumulative 1‐year multiplier of 2 during uncertain periods. In contrast, the multiplier is about 1 in times of high unemployment and about 0.4–0.8 during normal times. While we find positive employment effects in slumps as well as in uncertain times, two transmission channels can explain the higher multipliers in the latter: greater price flexibility leading to short‐term inflation (lowering the real interest rate) and diminishing risk premiums.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/ecin.13068

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:bla:ecinqu:v:60:y:2022:i:3:p:1164-1185

Ordering information: This journal article can be ordered from
https://ordering.onl ... s.aspx?ref=1465-7295

Access Statistics for this article

Economic Inquiry is currently edited by Tim Salmon

More articles in Economic Inquiry from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2024-01-30
Handle: RePEc:bla:ecinqu:v:60:y:2022:i:3:p:1164-1185