Fiscal multipliers and policies in France and Italy: What has happened in the decade after the Great Recession?

Sebastien Charles

Economics Bulletin, 2022, vol. 42, issue 3, 1706 - 1716

Abstract: This note has a twofold ambition. First, it empirically evaluates public spending multipliers for France and Italy, over the period 1986–2018, using an embryonic Keynesian model and a methodology based on cointegration with structural break. The estimates report that multipliers are above unity and statistically significant for both countries, which validates the necessity of a massive expansion in government spending during hard times. Second, it shows that during and after the Great Recession these countries never implemented a truly expansionary fiscal policy in order to reach full employment output or, at the very least, the level of output that would have prevailed without the crisis.

Keywords: Government spending multiplier; fiscal policy (search for similar items in EconPapers)
JEL-codes: C2 E1 (search for similar items in EconPapers)
Date: 2022-09-30
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