Are Government Spending Multipliers State Dependent? Evidence from U.S. and Canadian Historical Data
AbstractA key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and Canada. Using several methods for estimating multipliers, we find no evidence that multipliers are greater during periods of high unemployment in the U.S. In every case, they are below unity. We do find evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 290.
Date of creation: 2013
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-05 (All new papers)
- NEP-HIS-2013-10-05 (Business, Economic & Financial History)
- NEP-PBE-2013-10-05 (Public Economics)
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