A Simple Method to Compute Fiscal Multipliers

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Journal Issue

Volume/Issue:: 2014/93
Series:: IMF Working Papers
Author(s):: Nicoletta Batini, Luc Eyraud, and Anke Weber
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: June 2014
DOI:: http://dx.doi.org/10.5089/9781498357999.001
ISBN:: 9781498357999
ISSN:: 1018-5941
Page:: 33

Fiscal multipliers are important tools for macroeconomic projections and policy design. In many countries, little is known about the size of multipliers, as data availability limits the scope for empirical research. For these countries, we propose a simple method-dubbed the 'bucket approach'-to come up with reasonable multiplier estimates. The approach bunches countries into groups (or 'buckets') with similar multiplier values, based on their characteristics. It also takes into account the effect of some temporary factors, such as the state of the business cycle.

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A Simple Method to Compute Fiscal Multipliers