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Fiscal Multipliers and the State of the Economy
Author:
Ms. Anja Baum null

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Mr. Marcos Poplawski Ribeiro
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https://orcid.org/0000-0003-0998-7238
Series:
IMF Working Papers
Volume/Issue:
Volume 2012: Issue 286
Language:
English
Publication Date:
05 Dec 2012
DOI:
https://doi.org/10.5089/9781475565829.001
ISBN:
9781475565829
ISSN:
1018-5941
Pages:
31
Keywords:
WP; revenue multiplier; output gap regime; impact multiplier; mean output gap; multiplier prediction; multipliers call; output gap data; Fiscal policy; business cycle; nonlinear analysis; fiscal multipliers; fiscal multiplier; Output gap; Fiscal consolidation; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Only a few empirical studies have analyzed the relationship between fiscal multipliers and the underlying state of the economy. This paper investigates this link on a country-by-country basis for the G7 economies (excluding Italy). Our results show that fiscal multipliers differ across countries, calling for a tailored use of fiscal policy. Moreover, the position in the business cycle affects the impact of fiscal policy on output: on average, government spending, and revenue multipliers tend to be larger in downturns than in expansions. This asymmetry has implications for the choice between an upfront fiscal adjustment versus a more gradual approach.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund