Local fiscal multipliers of different government spending categories

T. van Gemert*, L. Lieb, T. Treibich

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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 languageEnglish
Pages (from-to)2551-2575
Number of pages25
JournalEmpirical Economics
Volume63
Early online date26 Feb 2022
DOIs
Publication statusPublished - Nov 2022

Keywords

  • Fiscal policy
  • Government spending
  • Local fiscal multiplier
  • FEDERAL-GRANTS
  • AMERICAN RECOVERY
  • CROWD-OUT
  • POLICY
  • PURCHASES
  • BOOTSTRAP
  • INFERENCE
  • ORIGINS
  • MODELS

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