Journal article
DESPERATE TIMES CALL FOR DESPERATE MEASURES: GOVERNMENT SPENDING MULTIPLIERS IN HARD TIMES
Economic inquiry, Vol.58(4), pp.1949-1957
10/2020
DOI: 10.1111/ecin.12919
PMCID: PMC7361205
PMID: 32836518
Abstract
We investigate state‐dependent effects of fiscal multipliers and allow for endogenous sample splitting to determine whether the U.S. economy is in a slack state. When the endogenized slack state is estimated as the period of the unemployment rate higher than about 12%, the estimated cumulative multipliers are significantly larger during slack periods than nonslack periods and are above unity. We also examine the possibility of time‐varying regimes of slackness and find that our empirical results are robust under a more flexible framework. Our estimation results point out the importance of the heterogenous effects of fiscal policy and shed light on the prospect of fiscal policy in response to economic shocks from the current COVID‐19 pandemic.
(
JEL
C32, E62, H20, H62)
Details
- Title: Subtitle
- DESPERATE TIMES CALL FOR DESPERATE MEASURES: GOVERNMENT SPENDING MULTIPLIERS IN HARD TIMES
- Creators
- Sokbae Lee - Columbia UniversityYuan Liao - Rutgers, The State University of New JerseyMyung Hwan Seo - Seoul National UniversityYoungki Shin - McMaster University
- Resource Type
- Journal article
- Publication Details
- Economic inquiry, Vol.58(4), pp.1949-1957
- DOI
- 10.1111/ecin.12919
- PMID
- 32836518
- PMCID
- PMC7361205
- NLM abbreviation
- Econ Inq
- ISSN
- 0095-2583
- eISSN
- 1465-7295
- Publisher
- Wiley Periodicals, Inc
- Number of pages
- 9
- Grant note
- SSHRC‐435‐2018‐0275 / ; ERC‐2014‐CoG‐646917‐ROMIA / ; NRF‐201851A5A2A01033487 / Seoul National University Research Grant in 2020 ES/P008909/1 / ;
- Alternative title
- DESPERATE TIMES CALL FOR DESPERATE MEASURES
- Language
- English
- Date published
- 10/2020
- Academic Unit
- Economics
- Record Identifier
- 9984936818502771
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