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Does it matter where and how governments spend?

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  • Sabaj, Ernil
  • Sbia, Rashid
  • Troug, Haytem

Abstract

This paper studies government spending multipliers in a panel of OECD countries. While recent literature has highlighted the differences in government consumption and investment effects, we extend this approach sectorally and report findings that suggest strong heterogeneities across sectors for government spending and output. Differences in price stickiness and sectors’ position in the production network are the main drivers of these heterogeneities.

Suggested Citation

  • Sabaj, Ernil & Sbia, Rashid & Troug, Haytem, 2023. "Does it matter where and how governments spend?," Economics Letters, Elsevier, vol. 228(C).
    • Handle: RePEc:eee:ecolet:v:228:y:2023:i:c:s0165176523001830
    DOI: 10.1016/j.econlet.2023.111158
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    More about this item

    Keywords

    Fiscal multiplier; Government investment; Government consumption; Sectoral heterogeneity; Sector-specific shocks;
    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

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