Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?

Chodorow-Reich, Gabriel

doi:10.1257/pol.20160465

Cited by 155 publications

(146 citation statements)

References 76 publications

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“…Such estimates ignore general equilibrium effects that cannot be separately identified in the crossregional regressions. For discussions of this point, see Chodorow-Reich (2018) and Nakamura and Steinsson (2018).…”

Section: Introductionmentioning

confidence: 99%

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Dupor

Karabarbounis

Kudlyak

et al. 2018

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We use regional variation in the American Recovery and Reinvestment Act (2009-2012) to analyze the effect of government spending on consumer spending. Our consumption data come from household-level retail purchases in Nielsen and auto purchases from Equifax credit balances. We estimate that a $1 increase in county-level government spending increases consumer spending by $0.29. We translate the regional consumption responses to an aggregate fiscal multiplier using a multi-region, New Keynesian model with heterogeneous agents and incomplete markets. Our model successfully generates the estimated positive local multiplier, a result that distinguishes our incomplete markets model from models with complete markets. The aggregate consumption multiplier is 0.64, which implies an output multiplier higher than one. The aggregate consumption multiplier is larger than the local estimate because trade linkages propagate government spending across regions.

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Section: Introductionmentioning

confidence: 99%

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Dupor

Karabarbounis

Kudlyak

et al. 2018

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show abstract

“…Our findings also relate to multiplier estimates using regional variation where, among other things, the aggregate effects of monetary policy are held constant (for examples see Acconcia, Corsetti, and Simonelli., 2014;Nakamura and Steinsson, 2014;Corbi, Papaioannou, and Surico, 2019). Reviewing this literature, Chodorow-Reich (2019) concludes that these "cross-sectional" multipliers are consistent with an aggregate "no-monetary-policy-response" multiplier of 1.7 or above. 1 Relative to all these papers, our focus is different.…”

Section: Introductionmentioning

confidence: 68%

Decomposing the Fiscal Multiplier

Cloyne¹,

Jordà²,

Taylor³

2020

ERWP

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Unusual circumstances often coincide with unusual fiscal policy actions. Much attention has been paid to estimates of how fiscal policy affects the macroeconomy, but these are typically average treatment effects. In practice, the fiscal "multiplier" at any point in time depends on the monetary policy response. Using the IMF fiscal consolidations dataset for identification and a new decomposition-based approach, we show how to evaluate these monetary-fiscal effects. In the data, the fiscal multiplier varies considerably with monetary policy: it can be zero, or as large as 2 depending on the monetary offset. We show how to decompose the typical macro impulse response function into (1) the direct effect of the intervention on the outcome; (2) the indirect effect due to changes in how other covariates affect the outcome when there is an intervention; and (3) a composition effect due to differences in covariates between treated and control subpopulations. This Blinder-Oaxaca-type decomposition provides convenient way to evaluate the effects of policy, state-dependence, and balance conditions for identification. JEL classification codes: C54, C99, E32, E62, H20, H5, N10.

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“…Consistent with the Treasury JobKeeper Report , Breunig and Watson (2020) estimate that the cost per job retained by JobKeeper for 6 months is between $70,000 and $102,000. They note that this is high by comparison with international programs; for example, the American Recovery and Reinvestment Act of 2008 had an average cost per job saved of $US47,619 (Chodorow‐Reich 2019). 24…”

Section: Jobkeeper: a Preliminary Assessmentmentioning

confidence: 99%

The Australian Labour Market and the Early Impact of COVID‐19: An Assessment

Borland

Charlton²

2020

Australian Economic Review

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From March to June 2020 was the most dramatic four months in the history of the Australian labour market. Never before has a such a substantial decrease in labour demand (and partial reversal) occurred so quickly. In this article, we present an overview of the early impact of COVID-19: the main drivers it brought into play and the consequent labour market developments. Aggregate effects and how impacts differed by type of job and worker are described. We conclude with a brief review of the main government response to COVID-19, the JobKeeper program.

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Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?

Cited by 155 publications

References 76 publications

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Regional Consumption Responses and the Aggregate Fiscal Multiplier

Decomposing the Fiscal Multiplier

The Australian Labour Market and the Early Impact of COVID‐19: An Assessment

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