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Fiscal multipliers and policies in France and Italy: What has happened in the decade after the Great Recession?

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  • Sébastien Charles

    (University Paris 8)

Abstract

This note has a twofold ambition. First, it empirically evaluates public spending multipliers for France and Italy, over the period 1986–2018, using an embryonic Keynesian model and a methodology based on cointegration with structural break. The estimates report that multipliers are above unity and statistically significant for both countries, which validates the necessity of a massive expansion in government spending during hard times. Second, it shows that during and after the Great Recession these countries never implemented a truly expansionary fiscal policy in order to reach full employment output or, at the very least, the level of output that would have prevailed without the crisis.

Suggested Citation

  • Sébastien Charles, 2022. "Fiscal multipliers and policies in France and Italy: What has happened in the decade after the Great Recession?," Economics Bulletin, AccessEcon, vol. 42(3), pages 1706-1716.
    • Handle: RePEc:ebl:ecbull:eb-22-00221
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    References listed on IDEAS

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    More about this item

    Keywords

    Government spending multiplier; fiscal policy;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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