Government spending multipliers in contraction and expansion

Walid Qazizada and Engelbert Stockhammer

No 2014-2, Economics Discussion Papers from School of Economics, Kingston University London

Abstract: This paper investigates the impact of government spending on output and the size of the spending multiplier during periods of output contraction vs. expansion. It also investigates the impact of spending when the economy hits the nominal zero lower bound. It uses a panel of 21 advanced countries over the period of 1979-2011, applying a TSLS estimation technique. We find a spending multiplier of close to 1 during expansion and values of up to 3 during contractions. However, our results do not indicate a difference in the impact of spending during nominal zero lower bound periods.

Keywords: Fiscal multiplier; fiscal policy; panel analysis; output contraction (search for similar items in EconPapers)
JEL-codes: C36 E62 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-05-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Government spending multipliers in contraction and expansion (2015)
Working Paper: Government spending multipliers in contraction and expansion (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kngedp:2014_002

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