On the Size of the Government Spending Multiplier in the Euro Area

P. F Ve and Jean-Guillaume Sahuc
Authors registered in the RePEc Author Service: Patrick Fève

Working papers from Banque de France

Abstract: This article addresses the existence of a wide range of estimated government spending multipliers in a dynamic stochastic general equilibrium model of the euro area. Our estimation results and counterfactual exercises provide evidence that omitting the interactions of key ingredients at the estimation stage (such as Edgeworth complementarity/substitutability between private consumption and government expenditures, endogenous government spending policy and general habits in consumption) paves the way for potentially large biases. We argue that uncertainty on the quantitative assessments of fiscal programmes could partly originate from these biases.

Keywords: Government spending multiplier; DSGE models; Estimation bias; Euro area. (search for similar items in EconPapers)
JEL-codes: C32 E32 E62 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: On the size of the government spending multiplier in the euro area (2015)
Working Paper: On the Size of the Government Spending Multiplier in the Euro Area (2015)
Working Paper: On the Size of the Government Spending Multiplier in the Euro Area (2013)
Working Paper: On the Size of the Government Spending Multiplier in the Euro Area (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:537

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