Monetization, wars, and the Italian fiscal multiplier
Riccardo (Jack) Lucchetti and
No 176, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences
This paper investigates the size of Italian fiscal multipliers under different business-cycle phases over the period 1872â€“2006. Using pre-WWII public defense expenditures as an instrument of total expenditures, we quantify the magnitude of the fiscal multiplier. Controlling for the business cycle phase, the multiplier is higher in recessions than in expansions. Furthermore, the multiplier is higher with the joint occurrence of monetization and slackness. Monetization alone does not exert a significant impact on the multiplier. Our results are confirmed using a timevarying parameter methodology that captures the countryâ€™s structural changes over a long stretch of time.
Keywords: Fiscal multipliers; War defense spending; Slackness; Monetization; Timevarying parameters. (search for similar items in EconPapers)
JEL-codes: E32 E58 E62 N13 N14 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:176
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