Are Government Spending Multipliers Greater during Periods of Slack? Evidence from Twentieth-Century Historical Data

Owyang, Michael T.; Ramey, Valerie A.; Zubairy, Sarah

doi:10.1257/aer.103.3.129

Cited by 294 publications

(214 citation statements)

References 5 publications

(3 reference statements)

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“…This method is becoming an increasingly popular tool to estimate non-linear effects of policy interventions (see, for example, Auerbach and Gorodnichenko 2013, Ramey and Zubairy 2014and Owyang, Ramey, and Zubairy 2013 For each horizon k = 0, . .…”

Section: Econometric Methods and Datamentioning

confidence: 99%

Austerity, inequality, and private debt overhang

Klein

Winkler

2019

European Journal of Political Economy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This result is robust to alternative identifications of fiscal consolidations, to different ways of defining periods of private debt overhang, and to controlling for the state of the business cycle. Terms of use: Documents inWe explore different channels through which our findings can be rationalized.

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Section: Econometric Methods and Datamentioning

confidence: 99%

Austerity, inequality, and private debt overhang

Klein

Winkler

2019

European Journal of Political Economy

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“…But what about earlier US history? Owyang, Ramey, and Zubairy (2013), building on previous work by Balke and Gordon (1989), have constructed a quarterly real GDP series that dates all the way back to 1875. For the 72-year period spanning 1875:I through 1947:I, the average GDP growth rates in their data are 5.15 percent when Democrats sat in the White House (119 quarters) and 3.91 percent when Republicans did (169 quarters).…”

Section: The D-r Gap Over a Longer Historical Periodmentioning

confidence: 99%

Presidents and the US Economy: An Econometric Exploration

Blinder

Watson

2016

American Economic Review

157

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An extensive and well-known literature of scholarly research documents and explores the fact that macroeconomic performance is a strong predictor of US presidential election outcomes. Scores of papers find that better performance boosts the vote of the incumbent's party.1 In stark contrast, economists have paid scant attention to predictive power running in the opposite direction: from election outcomes to subsequent macroeconomic performance. The answer, while hardly a secret, is not nearly as widely known as it should be.2 The US economy performs much better when a Democrat is president than when a Republican is.

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“…On the fiscal front, we consider the surprise tax policy changes from Mertens and Ravn (2011b), which are based on the narrative approach of Romer and Romer (2010); the anticipated tax policy changes of Leeper et al (2013); and the unanticipated changes in the expected present value of government spending in response to military events from Owyang et al (2013). All told, our list 19 Specifically, the unanticipated change in the funds rate is calculated as the change-with minor adjustments-in the current-month federal funds futures contract rate in a 30-minute window (10 minutes before to 20 minutes after) around the FOMC announcement; see Kuttner (2001) for details.…”

Section: Validation Of Financial and Uncertainty Shocksmentioning

confidence: 99%

“…h Anticipated tax changes from Leeper et al (2013Leeper et al ( ) (1975Leeper et al ( :Q1-2006:Q4, T = 128). i Defense spending shocks from Owyang et al (2013Owyang et al ( ) (1975Owyang et al ( :Q1-2013:Q4, T = 156).…”

Section: Validation Of Financial and Uncertainty Shocksmentioning

confidence: 99%

The Macroeconomic Impact of Financial and Uncertainty Shocks

Caldara¹,

Fuentes-Albero²,

Gilchrist³

et al. 2016

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We are especially grateful to Johannes Pfeifer and Jim Stock for detailed comments and suggestions. We also thank Nicholas Bloom, Robert Kollman, Eric Leeper, Tommaso Monacelli, Werner Roeger, and participants at numerous seminars and conferences for helpful comments. George Gu, Edward Kim, Shaily Patel, and Rebecca Zhang provided outstanding research assistance at various stages of this project. All errors and omissions are our own responsibility. The views expressed in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Board of Governors of the Federal Reserve System, anyone else associated with the Federal Reserve System, or the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.© 2016 by Dario Caldara, Cristina Fuentes-Albero, Simon Gilchrist, and Egon Zakrajšek. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. ABSTRACTThe extraordinary events surrounding the Great Recession have cast a considerable doubt on the traditional sources of macroeconomic instability. In their place, economists have singled out financial and uncertainty shocks as potentially important drivers of economic fluctuations. Empirically distinguishing between these two types of shocks, however, is difficult because increases in economic uncertainty are strongly associated with a widening of credit spreads, an indication of a tightening in financial conditions. This paper uses the penalty function approach within the SVAR framework to examine the interaction between financial conditions and economic uncertainty and to trace out the impact of these two types of shocks on the economy. The results indicate that (1) financial shocks have a significant adverse effect on economic outcomes and that such shocks were an important source of cyclical fluctuations since the mid-1980s; (2) uncertainty shocks, especially those implied by uncertainty proxies that do not rely on financial asset prices, are also an important source of macroeconomic disturbances; and (3) uncertainty shocks have an especially negative economic impact in situations where they elicit a concomitant tightening of financial conditions. Evidence suggests that the Great Recession was likely an acute manifestation of the toxic interaction between uncertainty and financial shocks.

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Are Government Spending Multipliers Greater during Periods of Slack? Evidence from Twentieth-Century Historical Data

Cited by 294 publications

References 5 publications

Austerity, inequality, and private debt overhang

Austerity, inequality, and private debt overhang

Presidents and the US Economy: An Econometric Exploration

The Macroeconomic Impact of Financial and Uncertainty Shocks

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