What determines government spending multipliers?

Mafia and public spending: Evidence of the fiscal multiplier from a quasi-experiment’, mimeo

Giancarlo Corsetti, Andre Meier and Gernot Müller

Economic Policy, 2012, vol. 27, issue 72, 521-565

Abstract: This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange rate regimes, as real appreciation and external deficits occur mainly under currency pegs. We also find output and consumption multipliers to be unusually high during times of financial crisis.— Giancarlo Corsetti, André Meier and Gernot J. Müller

Date: 2012
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Citations: View citations in EconPapers (312)

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Related works:
Working Paper: What Determines Government Spending Multipliers? (2012)
Working Paper: What Determines Government Spending Multipliers? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:27:y:2012:i:72:p:521-565.

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