We just estimated twenty million fiscal multipliers

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Year of publication 2020
Type Article in Periodical
Magazine / Source Oxford Bulletin of Economics and Statistics
MU Faculty or unit

Faculty of Economics and Administration

Web https://onlinelibrary.wiley.com/doi/abs/10.1111/obes.12351
Doi http://dx.doi.org/10.1111/obes.12351
Keywords Fiscal multiplier;structural VAR;meta-analysis
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Description Abstract We analyse the role played by data and specification choices as determinants of the size of the fiscal multipliers obtained using structural vector autoregressive models. The results, based on over twenty million fiscal multipliers estimated for European countries, indicate that many seemingly harmless modelling choices have a significant effect on the size and precision of fiscal multiplier estimates. In addition to the structural shock identification strategy, these modelling choices include the definition of spending and taxes, the national accounts system employed, the use of particular interest rates or inflation measures, or whether data are smoothed prior to estimation. The cumulative effects of such arguably innocuous methodological choices can lead to a change in the spending multipliers of as much as 0.4 points.
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