IMF Working Papers Volume 2014 Issue 213: Medium-Term Fiscal Multipliers during Protracted Recessions (2014)

Medium-Term Fiscal Multipliers during Protracted Recessions

Author:

Mr. Salvatore Dell'Erba

Mr. Salvatore Dell'Erba
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Mr. Marcos Poplawski Ribeiro

Mr. Marcos Poplawski Ribeiro
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https://orcid.org/0000-0003-0998-7238

, and

Ksenia Koloskova

Ksenia Koloskova
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Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 213

Publication Date:: 05 Dec 2014

DOI:: https://doi.org/10.5089/9781498336192.001

ISBN:: 9781498336192

ISSN:: 1018-5941

Pages:: 42

Keywords:: WP; labor market; real GDP; fiscal policy; unemployment rate; fiscal consolidations; cumulative multipliers; labour market; protracted recessions; PR episode; unemployment multiplier; TB consolidation; PR period; output effect; EB consolidation; consolidation multiplier; EB multiplier; Fiscal consolidation; Employment; Unemployment; Fiscal multipliers; Labor markets; Global

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.

Series:: IMF Working Papers

Volume/Issue:: Volume 2014: Issue 213

Language:: English

Publication Date:: 05 Dec 2014

DOI:: https://doi.org/10.5089/9781498336192.001

ISBN:: 9781498336192

ISSN:: 1018-5941

Pages:: 42

Keywords:: WP; labor market; real GDP; fiscal policy; unemployment rate; fiscal consolidations; cumulative multipliers; labour market; protracted recessions; PR episode; unemployment multiplier; TB consolidation; PR period; output effect; EB consolidation; consolidation multiplier; EB multiplier; Fiscal consolidation; Employment; Unemployment; Fiscal multipliers; Labor markets; Global

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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The paper examines the consequences of fiscal consolidation in times of persistently low growth and high unemployment by estimating medium-term fiscal multipliers during protracted recessions (PR) in a sample of 17 OECD countries. Based on Jorda’s (2005) local projection methodology, we find that cumulative fiscal multipliers related to output, employment and unemployment at five-year horizons are significantly above one during PR episodes. These results suggest that medium-term fiscal consolidation plans to reduce public debt burdens should proceed gradually if economic activity remains below trend for a prolonged period.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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