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A functional classification analysis of government spending multipliers

Author

Listed:
  • Panagiotis Th. Konstantinou

    (Athens University of Economics and Business)

  • Andromachi Partheniou

    (University of Patras)

  • Athanasios Tagkalakis

    (University of Patras)

Abstract

Using a panel of 33 OECD countries we estimate government spending multipliers for 11 different categories (functions) of spending: General Public Services, Defense, Public Order and Safety, Transport & Communication, Economic Services, Environment Protection, Housing and Community Amenities, Health, Education, Recreation, Culture and Religion, and Social Protection. We also account for variations in the state of the business cycle (recession vs expansion). Our results suggest that Public Services, Defense, Public Order, Transport & Communication, Health, Recreation and Education produce positive and high multipliers, whereas multipliers for Economic Services are negative, and multipliers for Environmental Protection, Housing and Social Protection are insignificant. In addition, multipliers for Public Services, Defense, Public Order, Transport & Communication, Health, Recreation and Education are higher in recession than in expansion.

Suggested Citation

  • Panagiotis Th. Konstantinou & Andromachi Partheniou & Athanasios Tagkalakis, 2022. "A functional classification analysis of government spending multipliers," Working Papers 298, Bank of Greece.
    • Handle: RePEc:bog:wpaper:298
    DOI: 10.52903/wp2022298
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    More about this item

    Keywords

    Government Spending Multipliers; Functional Classification; State-Dependent Multipliers; Local Projections; Smooth-Transition Models;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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