Understanding the Size of the Government Spending Multiplier: It's in the Sign

• 成果类型: Article
• 署名作者: Barnichon, Regis; Debortoli, Davide; Matthes, Christian
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - San Francisco; Centre for Economic Policy Research - UK; Pompeu Fabra University; Centre de Recerca en Economia Internacional (CREI); Barcelona School of Economics; Indiana University System; Indiana University Bloomington
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdab029
• 发表日期: 2022
• 页码: 87-117
• 关键词: nominal wage rigidity; fiscal-policy; macroeconomics; purchases; stimulus; output; taxes

摘要

This article argues that an important, yet overlooked, determinant of the government spending multiplier is the direction of the fiscal intervention. Regardless of whether we identify government spending shocks from (1) a narrative approach or (2) a timing restriction, we find that the contractionary multiplier-the multiplier associated with a negative shock to government spending-is above 1 and largest in times of economic slack. In contrast, the expansionary multiplier-the multiplier associated with a positive shock-is substantially below 1 regardless of the state of the cycle. These results help understand seemingly conflicting results in the literature. A simple theoretical model with incomplete financial markets and downward nominal wage rigidities can rationalize our findings.