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The Fiscal Multiplier and Economic Policy Analysis in the United States: Working Paper 2015-02

Author

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  • Felix Reichling
  • Charles Whalen

Abstract

The recession from 2007 to 2009 sparked wide interest in the economic effects of fiscal policy. That interest is reflected in an ongoing debate over the size of the fiscal multiplier. This working paper addresses three questions: What models do economists use to estimate that multiplier? Why do estimates of it vary widely? How can economists use those estimates to judiciously analyze U.S. economic policy??

Suggested Citation

  • Felix Reichling & Charles Whalen, 2015. "The Fiscal Multiplier and Economic Policy Analysis in the United States: Working Paper 2015-02," Working Papers 49925, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:49925
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    References listed on IDEAS

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    Cited by:

    1. Dime, Roselle & Ginting, Edimon & Zhuang, Juzhong, 2021. "Estimating Fiscal Multipliers in Selected Asian Economies," ADB Economics Working Paper Series 638, Asian Development Bank.
    2. Paul Carrillo & Anthony Yezer & Jozefina Kalaj, 2017. "Could Austerity Collapse the Economy of Puerto Rico?," Working Papers 2017-17, The George Washington University, Institute for International Economic Policy.
    3. Şen, Hüseyin & Kaya, Ayşe, 2017. "How large are fiscal multipliers in Turkey?," EconStor Preprints 162763, ZBW - Leibniz Information Centre for Economics.
    4. Cem Çebi & K.Azim Özdemir, 2021. "Cyclical variation of the fiscal multiplier in Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(2), pages 495-509, January.
    5. Dean Baker & Nick Buffie, 2015. "Pension Funding and the Economy: Would “Proper” Funding Cost Jobs?," CEPR Reports and Issue Briefs 2015-22, Center for Economic and Policy Research (CEPR).
    6. Allan Gloe Dizioli & Ursel Baumann & Alistair Dieppe & Allan Gloe Dizioli, 2017. "Tremendous global spillovers. Analysis and mechanisms of the destination based border adjustment tax," EcoMod2017 10520, EcoMod.
    7. Jiménez, Alvaro & Rodríguez, Gabriel & Ataurima Arellano, Miguel, 2023. "Time-varying impact of fiscal shocks over GDP growth in Peru: An empirical application using hybrid TVP-VAR-SV models," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 314-332.
    8. D. J. Penzin & E. T. Adamgbe, 2019. "Estimation of Fiscal Multipliers and Its Macroeconomic Impact: The Case of Nigeria," Economic and Financial Review, Central Bank of Nigeria, vol. 57(2), June.
    9. Etienne Farvaque & Florence Huart, 2017. "A policymaker’s guide to a Euro area stabilization fund," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(1), pages 11-30, April.
    10. Harald Uhlig, 2016. "Comment on "Jump-Starting the Euro Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery?"," NBER Chapters, in: NBER Macroeconomics Annual 2016, Volume 31, pages 183-197, National Bureau of Economic Research, Inc.
    11. Masud Alam, 2021. "Heterogeneous Responses to the U.S. Narrative Tax Changes: Evidence from the U.S. States," Papers 2107.13678, arXiv.org.
    12. Ursel Baumann & David Lodge & Mirela S. Miescu, 2024. "Global growth on life support? The contributions of fiscal and monetary policy since the global financial crisis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 76-90, January.
    13. Stiglitz, Joseph, 2021. "Lessons from COVID-19 and Trump for Theory and Policy (Paper)," Journal of Policy Modeling, Elsevier, vol. 43(4), pages 749-760.
    14. António Afonso & Eduardo Rodrigues, 2024. "Is public investment in construction and in R&D, growth enhancing? A PVAR approach," Applied Economics, Taylor & Francis Journals, vol. 56(24), pages 2875-2899, May.
    15. Arora, Vipin, 2015. "Oil prices and the US economy: Where is the boom?," Economics Discussion Papers 2015-48, Kiel Institute for the World Economy (IfW Kiel).
    16. Syed Sadaqat Ali Shah & Muhammad Asim Afridi, 2023. "Cyclical variation of fiscal multipliers in Caucasus and Central Asia economies: an empirical evidence," Economic Change and Restructuring, Springer, vol. 56(6), pages 4531-4563, December.
    17. Fernando, Roshen & McKibbin, Warwick J., 2021. "Macroeconomic Policy Adjustments due to COVID-19: Scenarios to 2025 with a Focus on Asia," ADBI Working Papers 1219, Asian Development Bank Institute.
    18. Shigeaki Ogibayashi & Kosei Takashima, 2017. "Influence of Inefficiency in Government Expenditure on the Multiplier of Public Investment," Computational Economics, Springer;Society for Computational Economics, vol. 50(4), pages 549-577, December.
    19. Baumann, Ursel & Lodge, David & Miescu, Mirela S., 2019. "Global growth on life support? The contributions of fiscal and monetary policy since the global financial crisis," Working Paper Series 2248, European Central Bank.
    20. Eduardo de Sá Fortes Leitão Rodrigues, 2020. "Uncertainty And The Effectiveness Of Fiscal Policy In The United States And Brazil: Svar Approach," Working Papers REM 2020/0150, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    21. Deborah Lucas, 2016. "Credit Policy as Fiscal Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 1-57.
    22. Eduardo de Sa Fortes Leitao Rodrigues, 2023. "Uncertainty and the effectiveness of fiscal policy in the United States and Brasil: SVAR Approach," Working Papers 2023.03, International Network for Economic Research - INFER.

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    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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