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PUBLIC INVESTMENT FISCAL MULTIPLIERS: AN EMPIRICAL ASSESSMENT FOR EUROPEAN COUNTRIES

Enrico Levrero (), Matteo Deleidi () and Francesca Iafrate

No 247, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: This paper aims to estimate fiscal multipliers in eleven Eurozone countries. To do this, we make use of yearly data provided by the OECD for the 1970–2016 period. By using the Local Projections approach on a panel dataset and considering different model specifications, we estimate the magnitude assumed by fiscal multipliers in order to assess whether an increase in government investment generates a ‘Keynesian effect’ on the level of the GDP. Our findings suggest that fiscal multipliers tend to be larger than one and an increase in public investment engenders a permanent and persistent effect on the level of output. Additional model specifications suggest that government investment fiscal multipliers are lower when the post-crisis period is excluded by our sample and are larger in Southern countries than Northern ones.

Keywords: Fiscal Multipliers; Government Investment; Local Projections; Euro area (search for similar items in EconPapers)
JEL-codes: E12 H54 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-mac
Date: 2019-05
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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0247

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