Heterogeneous Spending, Heterogeneous Multipliers

Umberto Muratori, Pedro Juarros and Daniel Valderrama-Gonzalez

No 2023/052, IMF Working Papers from International Monetary Fund

Abstract: Do local fiscal multipliers depend on what the government purchases? We find that government purchases of services have larger effects on employment than spending on goods. Industries producing services are more labor-intensive than industries producing goods. This heterogeneity in labor intensity is an important mechanism behind these results. Spending directed toward labor-intensive industries generates stronger increases in employment and labor income relative to spending toward non-labor-intensive industries.

Keywords: Heterogeneous Local Fiscal Multipliers; Services and Goods Spending; Labor Intensity; government purchase; heterogeneous multiplier; copyright page; goods spending; services spending; Fiscal multipliers; Employment; Defense spending (search for similar items in EconPapers)
Pages: 50
Date: 2023-03-10
New Economics Papers: this item is included in nep-ure
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