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Expansionary and contractionary fiscal multipliers in the U.S

Author

Listed:
  • George Kapetanios

    (King’s College London)

  • Panagiotis Koutroumpis

    (Queen Mary University London)

  • Christopher Tsoukis

    (Keele University)

Abstract

We estimate the fiscal (spending) multiplier using quarterly U.S. data, 1986-2017. We define government spending shocks as actual minus expected expenditure growth, the latter obtained from the Survey of Professional Forecasters. We employ the ST-VAR model with the local projections method. A key testable conjecture is that the effects of positive and negative spending shocks have numerically different effects (the latter being stronger). Although we cannot formally reject the null of equality, the conjecture does hold in general. We also nd evidence of state-dependence of multipliers as previously pointed out.

Suggested Citation

  • George Kapetanios & Panagiotis Koutroumpis & Christopher Tsoukis, 2022. "Expansionary and contractionary fiscal multipliers in the U.S," Working Papers 939, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:939
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    References listed on IDEAS

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    More about this item

    Keywords

    fiscal multiplier; government spending; stabilisation policy; local projections;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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