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Impacts of Government Spending Changes on Local Economies

Author

Listed:
  • Santiago Pinto
  • Sonya Ravindranath Waddell

Abstract

Local multipliers measure how an economic shock in a specific region (such as a change in federal government spending in that region) affects the local economy. Based on our survey of studies, a reasonable estimate range for local fiscal multipliers is: An income multiplier of 1.3-2.0, or an additional $1 of government spending increasing local GDP by 1.3 to 2.0 times. An employment multiplier of 10-30 jobs in the local economy for every additional $1 million in government spending (or $33,000 to $100,000 per job).

Suggested Citation

  • Santiago Pinto & Sonya Ravindranath Waddell, 2025. "Impacts of Government Spending Changes on Local Economies," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 25(28), July.
    • Handle: RePEc:fip:fedreb:101288
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    File URL: https://www.richmondfed.org/publications/research/economic_brief/2025/eb_25-28
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