2012
DOI: 10.1111/j.1468-0327.2012.00295.x
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What determines government spending multipliers?

Abstract: This paper studies how the effects of government spending vary with the economic environment. Using a panel of OECD countries, we identify fiscal shocks as residuals from an estimated spending rule and trace their macroeconomic impact under different conditions regarding the exchange rate regime, public indebtedness, and health of the financial system. The unconditional responses to a positive spending shock broadly confirm earlier findings. However, conditional responses differ systematically across exchange … Show more

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Cited by 290 publications
(311 citation statements)
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References 71 publications
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“…How restrictive is the assumption that government consumption does not react to output within a year? Corsetti et al (2010) discuss this issue in detail and, while it might be that during the 2008-09 crisis governments reacted quickly to economic conditions (maybe as fast as 5 to 8 months), this is more of the exception than the norm. Indeed, budgets are done on an annual basis and changes during the fiscal year are more cumbersome.…”
Section: Panel Vector Auto-regressionsmentioning
confidence: 99%
See 3 more Smart Citations
“…How restrictive is the assumption that government consumption does not react to output within a year? Corsetti et al (2010) discuss this issue in detail and, while it might be that during the 2008-09 crisis governments reacted quickly to economic conditions (maybe as fast as 5 to 8 months), this is more of the exception than the norm. Indeed, budgets are done on an annual basis and changes during the fiscal year are more cumbersome.…”
Section: Panel Vector Auto-regressionsmentioning
confidence: 99%
“…In this section, we follow this approach and restrict our analysis to shocks in government consumption even if this just provides a partial view on potential changes in fiscal policy. This approach has been followed by many of the recent empirical papers in the literature, including those looking at effects on the exchange rate and the current account (Corsetti et al, 2010, Beetsma et al, 2007or Monacelli and Perotti, 2007). …”
Section: Panel Vector Auto-regressionsmentioning
confidence: 99%
See 2 more Smart Citations
“…Eine Vielzahl von unterschiedlichen Nachfrageund Angebotsschocks kann diese konjunkturellen Schwan- 18 Diese Verzö-gerungen erhöhen das Risiko, dass sie nicht anti-, sondern sogar prozyklisch wirken. 19 Eine aktive Fiskalpolitik, die auf diese Weise selbst zu höheren Konjunkturschwankungen beiträgt, dürfte die Unsicherheit steigern und so die Investitionstätigkeit beeinträchtigen. 20 Ferner besteht das Risiko, dass die beschlossenen temporären Maßnahmen am Ende nicht zurückgenommen werden.…”
Section: Der Reiz Konjunktureller Glättungunclassified