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Fève, Patrick
and Sahuc, Jean-Guillaume
(2013)
On the Size of the Government Spending Multiplier in the Euro Area.
TSE Working Paper, n. 13-396
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Abstract
This article addresses the existence of a wide range of estimated government spending multipliers in a dynamic stochastic general equilibrium model of the euro area. Our estimation results and counterfactual exercises provide evidence that omitting the interactions of key ingredients at the estimation stage (such as Edgeworth complementarity/subtitutability between private consumption and government expenditures, endogenous government spending policy and general time nonseparable preferences) paves the way for potentially large biases. We argue that uncertainty on the quantitative assessments of fiscal programmes could partly originate from these biases.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | April 2013 |
| Uncontrolled Keywords: | Government spending multiplier, DSGE models, Estimation bias, Euro area |
| JEL Classification: | C32 - Time-Series Models E32 - Business Fluctuations; Cycles E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 09 Jul 2014 17:35 |
| Last Modified: | 02 Apr 2021 15:48 |
| OAI Identifier: | oai:tse-fr.eu:27174 |
| URI: | https://publications.ut-capitole.fr/id/eprint/15609 |
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- On the Size of the Government Spending Multiplier in the Euro Area. (deposited 09 Jul 2014 17:35) [Currently Displayed]
