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Second Thoughts on Estimating Expansionary Fiscal Policy E ffects in the United States

Bijie Jia ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper revisits mixed findings of the expansionary fiscal spending effect in the United States. An array of standard Vector-Autoregressive (VAR) models has been implemented to capture inconsistent effects of the fiscal expansion. Findings in this paper consistently reveal that without considering the influence of transfer payments, state and local government spending, and the timing of sample, measuring the effect of expanded government purchases along would result in an upward bias of the comprehensive fiscal stimulus effect. This paper questions the validity of using government purchases alone to precisely evaluate the effect of fiscal expansion.

Keywords: E21; E32; E62; H30; H50. (search for similar items in EconPapers)
JEL-codes: E21 E32 E62 H30 H50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
Date: 2018-10
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Handle: RePEc:pra:mprapa:90298