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The dynamic effects of public expenditure shocks in the United States

Susana Parraga Rodriguez ()

Journal of Macroeconomics, 2018, vol. 56, issue C, 340-360

Abstract: This paper estimates the dynamic aggregate effects of exogenous shocks to two key components of public expenditure in the United States, government income transfers and government spending. The identification strategy positions the structural shocks to public expenditure in an SVAR framework with exogenous measures of public expenditure changes. Transfers shocks are based on a new narrative variable of legislated increases in U.S. social security benefits. I demonstrate that shocks to different types of public expenditure do not have the same macroeconomic impact. The estimated government spending multiplier is between 0 and 1, while increases in transfers generate a multiplier effect above 1.

Keywords: Government expenditures; Transfer payments; Social security (search for similar items in EconPapers)
JEL-codes: E2 E62 H55 H56 I38 (search for similar items in EconPapers)
Date: 2018
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Working Paper: The dynamic effect of public expenditure shocks in the United States (2016) Downloads
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Handle: RePEc:eee:jmacro:v:56:y:2018:i:c:p:340-360