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How Big (Small?) are Fiscal Multipliers?, Ethan Ilzetzki, Enrique Mendoza, Carlos Végh Gramont

We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; 1. Methodology; 1.1 Identification of Fiscal Shocks; 1.2 Estimation Methodology; 1.3 Fiscal Multipliers: Definitions; 1.4 Lag Structure; Table 1 Optimal Number of Lags Based on Specification Tests; 2. Data; 2.1 Are Innovations to Government Consumption Foreseen?; Figure 1. Quarterly Government Consumption; Figure 2. Quarterly Government Consumption and Commodity Prices; Figure 3a.Central Bank Estimation Errors and VAR Residuals; Figure 3b.Central Bank Estimation Errors and VAR Residuals; 3. Results
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (70 p.)
Specific Material Designation
Form Of Item

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