Expansionary and contractionary fiscal multipliers in the U.S

George Kapetanios, Panagiotis Koutroumpis and Christopher Tsoukis
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Panagiotis Koutroumpis: Queen Mary University London
Christopher Tsoukis: Keele University

No 939, Working Papers from Queen Mary University of London, School of Economics and Finance

Abstract: We estimate the fiscal (spending) multiplier using quarterly U.S. data, 1986-2017. We define government spending shocks as actual minus expected expenditure growth, the latter obtained from the Survey of Professional Forecasters. We employ the ST-VAR model with the local projections method. A key testable conjecture is that the effects of positive and negative spending shocks have numerically different effects (the latter being stronger). Although we cannot formally reject the null of equality, the conjecture does hold in general. We also nd evidence of state-dependence of multipliers as previously pointed out.

Keywords: fiscal multiplier; government spending; stabilisation policy; local projections (search for similar items in EconPapers)
JEL-codes: E60 E62 H30 (search for similar items in EconPapers)
Date: 2022-05-03
New Economics Papers: this item is included in nep-des, nep-mac and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:qmw:qmwecw:939

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