Fiscal multipliers in recessions and expansions : does it matter whether government spending is increasing or decreasing ? (English)

Using non-linear methods, this paper finds that existing estimates of government spending multipliers in expansion and recession may yield biased results by ignoring whether government spending is increasing or decreasing. For industrial countries, the problem originates in the fact that, contrary to one's priors, it is not always the case that government spending is going up in recessions (i.e., acting countercyclically). In almost as many cases...

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Author

Riera-Crichton,Daniel;

Vegh Gramont,Carlos Alberto;

Vuletin,Guillermo Javier;
Document Date
2014/07/01
Document Type
Policy Research Working Paper
Report Number
WPS6993
Volume No
1
Total Volume(s)
1
Country
World,
Region
Other,
Disclosure Date
2014/07/01
Disclosure Status
Disclosed
Doc Name
Fiscal multipliers in recessions and expansions : does it matter whether government spending is increasing or decreasing ?
Keywords
business cycle

Language

English

Rel. Proj ID

1W-Reforms and Growth -- P080834

Major Sector

FY17 - Public Administration

Theme

FY17 - Structural Transformation and Economic Diversification,FY17 - Inclusive Growth,FY17 - Green Growth,FY17 - Economic Growth and Planning

Sector

FY17 - Central Government (Central Agencies)

TF No/Name

TF098053-KCPII - Industrial Policy in an Uncertain Environment,TF099120-KCP II: Fiscal Mulitpliers and the State of the Economy,TF099853-PHRD STAFF GRANT SUPPORT FOR TOMOKO WADA,TF012576-PHRD Staff Grant Support for Tomoko Wada

Topics

Macroeconomic and Structural Policies,

Historic Topics

Macroeconomics and Economic Growth,

Historic SubTopics

Consumption, Fiscal & Monetary Policy,

Unit Owning

DECRG: Macroeconomics & Growth (DECMG); Off of Sr VP Dev Econ/Chief Econ (DECVP)

Version Type

Final

Series Name

Paper is funded by the Knowledge for Change Program (KCP)|Policy Research working paper ; no. WPS 6993;

Product Line

Research Services

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Citation

Riera-Crichton,Daniel; Vegh Gramont,Carlos Alberto; Vuletin,Guillermo Javier.

Fiscal multipliers in recessions and expansions : does it matter whether government spending is increasing or decreasing ? (English). Paper is funded by the Knowledge for Change Program (KCP)|Policy Research working paper ; no. WPS 6993 Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/147591468331251888

Fiscal multipliers in recessions and expansions : does it matter whether government spending is increasing or decreasing ? (English)

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