EconPapers    
Economics at your fingertips  
 

Fiscal multipliers in the 21st century

Pedro Brinca, Hans Holter, Per Krusell and Laurence Malafry

Journal of Monetary Economics, 2016, vol. 77, issue C, 53-69

Abstract: Fiscal multipliers appear to vary greatly over time and space. Based on VARs for a large number of countries, we document a strong correlation between wealth inequality and the magnitude of fiscal multipliers. In an attempt to account for this finding, we develop a life-cycle, overlapping-generations economy with uninsurable labor market risk. We calibrate our model to match key characteristics of a number of OECD economies, including the distribution of wages and wealth, social security, taxes, and government debt and study how a fiscal multiplier depends on various country characteristics. We find that the fiscal multiplier is highly sensitive to the fraction of the population who face binding credit constraints and also to the average wealth level in the economy. These findings together help us generate a cross-country pattern of multipliers that is quite similar to that in the data.

Keywords: Fiscal multipliers; Wealth inequality; Government spending; Taxation (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (80)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393215001130
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Fiscal Multipliers in the 21st Century (2015) Downloads
Working Paper: Fiscal Multipliers in the 21st century (2015) Downloads
Working Paper: Fiscal Multipliers in the 21st Century (2015) Downloads
Working Paper: Fiscal Multipliers in the 21st Century (2014) Downloads
Working Paper: Fiscal Multipliers in the 21st Century (2014) Downloads
Working Paper: Fiscal Multipliers in the 21st Century (2014) Downloads
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:eee:moneco:v:77:y:2016:i:c:p:53-69

DOI: 10.1016/j.jmoneco.2015.09.005

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2024-12-28
Handle: RePEc:eee:moneco:v:77:y:2016:i:c:p:53-69