Article2019

Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?

331 citations0/0 files storedAmerican Economic Journal Economic Policy

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Monetary Policy and Economic Impact Fiscal Policies and Political Economy Fiscal Policy and Economic Growth

Abstract

A geographic cross-sectional fiscal spending multiplier measures the effect of an increase in spending in one region of a monetary union. Empirical studies of such multipliers have proliferated. I review this research and what the evidence implies for national multipliers. Based on an updated analysis of the ARRA and a survey of empirical studies, my preferred point estimate for a cross-sectional multiplier is 1.8. The paper also discusses conditions under which the cross-sectional multiplier provides a rough lower bound for the national, no-monetary-policy-response multiplier. Putting these elements together, the cross-sectional evidence suggests a national no-monetary-policy-response multiplier of 1.7 or above. (JEL E32, E52, E62, H54, H76, R53)

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References

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