China’s Fiscal Multiplier and Its State Dependence

Wen Zhang, Yangyang Zhang, Xinye Zheng and Li Zhang

Manchester School, 2019, vol. 87, issue 2, 205-227

Abstract: This paper studies the effects of government spending on China’s output with a threshold structural vector autoregressive model. The empirical findings suggest that increasing government expenditure significantly raises China’s aggregate output. Contrary to the evidence of countercyclical fiscal multipliers in the advanced economies, China’s fiscal multiplier tends to be procyclical, suggesting a novel fiscal policy transmission mechanism in China.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:87:y:2019:i:2:p:205-227

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