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The Effectiveness of Government Expenditures during Crisis: Evidence from Regional Government Spending in Japan 1990-2000

Author

Listed:
  • Markus Bruckner

    (School of Economics, University of Adelaide)

  • Anita Tuladhar

    (International Monetary Fund)

Abstract

We use a rich dataset of regional government expenditures for Japan during the 1990-2000 period to estimate from within-prefecture variation the multiplier of government investment and government consumption expenditures. Our main finding is that government spending did not have multipliers effects that are on average larger than one. Government investment had a positive and significant effect on output that was quantitatively larger than the effect of government consumption expenditures. Government personnel expenditures and transfers to households had significant negative output effects while transfers to firms produced positive multiplier effects that were significantly larger than one. Our findings are consistent with macro model that emphasize the supplyside effects of fiscal policy during times of financial crisis.

Suggested Citation

  • Markus Bruckner & Anita Tuladhar, 2011. "The Effectiveness of Government Expenditures during Crisis: Evidence from Regional Government Spending in Japan 1990-2000," School of Economics and Public Policy Working Papers 2011-10, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2011-10
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2011-10.pdf
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    Cited by:

    1. Rajmund MIRDALA, 2016. "Effects of Fiscal Policy Shocks in the Euro Area Lessons Learned from Fiscal Consolidation," Journal of Advanced Research in Law and Economics, ASERS Publishing, vol. 7(8), pages 2236-2276.
    2. Miyazaki, Tomomi, 2013. "Fiscal Policy and Regional Business Cycle Fluctuations in Japan," Discussion Paper Series 583, Institute of Economic Research, Hitotsubashi University.
    3. Maria Coelho, 2019. "Fiscal Stimulus in a Monetary Union: Evidence from Eurozone Regions," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 573-617, September.

    More about this item

    Keywords

    fiscal policy; fiscal multipliers;

    JEL classification:

    • 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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