Abstract
This paper compares multipliers of different categories of US federal government spending, and in doing so provides a new insight as to why fiscal multipliers may differ across countries and time. We identify exogenous federal government spending shocks at the state level for defense and non-defense spending. Using a projection-based approach, we estimate the cumulative multiplier due to shocks in either of these spending categories. Our results indicate that defense spending yields lower multipliers than non-defense spending. Thus, focusing only on defense spending may result in underestimating the multiplier for government spending.
Original language | English |
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Pages (from-to) | 2551-2575 |
Number of pages | 25 |
Journal | Empirical Economics |
Volume | 63 |
Early online date | 26 Feb 2022 |
DOIs | |
Publication status | Published - Nov 2022 |
Keywords
- Fiscal policy
- Government spending
- Local fiscal multiplier
- FEDERAL-GRANTS
- AMERICAN RECOVERY
- CROWD-OUT
- POLICY
- PURCHASES
- BOOTSTRAP
- INFERENCE
- ORIGINS
- MODELS