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The Effects of Government Spending Over the Business Cycle: A Disaggregated Analysis for OECD and Non-OECD Countries

Panagiotis Konstantinou () and Andromachi Partheniou ()
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Panagiotis Konstantinou: AUEB
Andromachi Partheniou: AUEB

No 1904, DEOS Working Papers from Athens University of Economics and Business

Abstract: Using a panel of OECD and non-OECD economies, we estimate the effects of three types of government expenditure (compensation of government employees, government use of goods and services and government investment) and social benefits on output, private consumption and investment. In OECD economies, we find that compensation of government employees and government investment generate significantly positive multipliers, whereas government use of goods and services does not. However, only the multipliers of compensation of government employees are found higher during recessions and only for horizons of up to two years ahead. In non-OECD economies, the multipliers of compensation of government employees and government investment are positive but smaller than those for the OECD group and they do not tend to differ in recessions and in expansions. We also provide evidence that social benefits generate increases of private consumption, for both OECD and non-OECD countries.

Keywords: Fiscal Policy; Government Spending Multipliers; State-Dependent Multipliers; Local Projections; Non-Linear Models (search for similar items in EconPapers)
JEL-codes: E62 E32 C33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-mac
Date: 2019-09-19
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