Ilzetzki, Ethan, Mendoza, Enrique G. and Végh Gramont, Carlos A. (2012) How big (small?) are fiscal multipliers? Journal of monetary economics . ISSN 0304-3932
Abstract
Contributing to the debate on the macroeconomic effects of fiscal stimuli, we show 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 fiscal multiplier is relatively large in economies operating under predetermined exchange rates but is zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are smaller than in closed economies; (iv) fiscal multipliers in high-debt countries are negative.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.journals.elsevier.com/journal-of-moneta... |
| Additional Information: | © 2012 Elsevier B.V. |
| Library of Congress subject classification: | H Social Sciences > HB Economic Theory H Social Sciences > HG Finance |
| Journal of Economic Literature Classification System: | E - Macroeconomics and Monetary Economics > E0 - General G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation |
| Sets: | Departments > Economics |
| Rights: | http://www.lse.ac.uk/library/rights/LSERO.htm |
| URL: | http://eprints.lse.ac.uk/47583/ |
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