Pages

Tuesday, February 07, 2012

What is the fiscal multiplier?


It depends.

FRBSF Economic Letter: Government Spending: An Economic Boost? (2012-04, 2/6/2012):

What does this literature tell policymakers and others trying to assess the impact of fiscal policy changes? It is an inconvenient reality that this literature provides an enormous range of multiplier estimates, ranging from –1 to 3. However, this range is not so much a reflection of disagreement over an underlying parameter as it is a reflection of one of the key lessons of this research—that there is no single multiplier that can be applied mechanically to all situations

No comments: