Government spending multipliers in contraction and expansion

Walid Qazizada and Engelbert Stockhammer

International Review of Applied Economics, 2015, vol. 29, issue 2, 238-258

Abstract: This paper investigates the impact of government spending on output and the size of the spending multiplier during periods of output contraction and expansion. It also investigates the impact of spending when the economy hits the nominal zero lower bound. It uses a panel of 21 advanced countries over the period of 1979-2011, applying a TSLS estimation technique. We find a spending multiplier of close to 1 during expansion and values of up to 3 during contractions. However, our results do not indicate a difference in the impact of spending during nominal zero lower bound periods.

Date: 2015
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Working Paper: Government spending multipliers in contraction and expansion (2014)
Working Paper: Government spending multipliers in contraction and expansion (2014)
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DOI: 10.1080/02692171.2014.983053

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