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The Government Spending Multiplier at the Zero Lower Bound: International Evidence from Historical Data

Mathias Klein and Roland Winkler ()

Annual Conference 2018 (Freiburg, Breisgau): Digital Economy from Verein für Socialpolitik / German Economic Association

Abstract: Based on a large historical panel dataset, this paper provides robust evidence that the government spending multiplier is significantly higher when interest rates are at, or near, the zero lower bound. We estimate fiscal multipliers that are around 1.5 during zero lower bound episodes and significantly below unity outside of it. We show that the difference in multipliers is not driven by multipliers being higher during periods of economic slack.

Keywords: Government spending multiplier; zero lower bound; local projections (search for similar items in EconPapers)
JEL-codes: E32 E62 E65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2018
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https://www.econstor.eu/bitstream/10419/181524/1/VfS-2018-pid-12672.pdf (application/pdf)

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Working Paper: The government spending multiplier at the zero lower bound: International evidence from historical data (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc18:181524

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