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Inside the IMF Òmea culpaÓ: A panel analysis on growth forecast errors and Keynesian multipliers in Europe

Author

Listed:
  • Emiliano Brancaccio

    (Universitˆ del Sannio Italy)

  • Fabiana De Cristofaro

    (Scuola Superiore SantÕAnna Italy)

Abstract

The tests carried out by Blanchard and Leigh (2013; IMF, 2012) and F‡tas and Summers (2018) are extended here into a panel framework in order to assess the empirical basis of the so-called IMF Òmea culpaÓ regarding the underestimation of Keynesian multipliers during the euro area crisis. The objections put forward by the European Central Bank, the European Commission and other authors against the ÒunderestimationÓ thesis are tested and refuted. The results support the Òmea culpaÓ and highlight that the underestimation of multipliers can concern both the short and the long term.

Suggested Citation

  • Emiliano Brancaccio & Fabiana De Cristofaro, 2020. "Inside the IMF Òmea culpaÓ: A panel analysis on growth forecast errors and Keynesian multipliers in Europe," PSL Quarterly Review, Economia civile, vol. 73(294), pages 225-239.
    • Handle: RePEc:psl:pslqrr:2020:32
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    More about this item

    Keywords

    GDP forecast errors; Keynesian multipliers; panel analysis;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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