EconPapers    
Economics at your fingertips  
 

Re-Evaluating The Keynesian Multiplier: Critiques And Evidence From Europe

Enrico Gabriele
Additional contact information
Enrico Gabriele: LUMSA University

No wpC21, CERBE Working Papers from CERBE Center for Relationship Banking and Economics

Abstract: This paper starts from Keynes’ General Theory to demonstrate the existence of a non-linear Keynesian multiplier on the grounds of cross-country data. Thus, we prove the effectiveness of short-run countercyclical exogenous stimuli during downturns. The role of fiscal spending is discussed in light of different schools of thought, including the well-known “expansionary fiscal contraction” theory. Moreover, we examine the European fiscal rules of convergence – aimed to sovereign debt sustainability – that affect the size of “fiscal space”. Empirical data from several Eurozone countries provide evidence of traditional multipliers. Furthermore, the Greek economy displays a non-linear case of multiplier. This leads to rejecting the assumption of a weak Keynesian setting, which supported instead the IMF-backed fiscal contraction.

Keywords: Keynesian Multiplier; Expansionary Fiscal Contraction; Euro Sovereign Crisis (search for similar items in EconPapers)
JEL-codes: E12 E17 E61 E63 E65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-pke
Date: 2017-08
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://repec.lumsa.it/wp/wpC21.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lsa:wpaper:wpc21

Access Statistics for this paper

More papers in CERBE Working Papers from CERBE Center for Relationship Banking and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Pierluigi Murro ().

 
Page updated 2019-05-25
Handle: RePEc:lsa:wpaper:wpc21