A Simple Method to Compute Fiscal Multipliers

34 Pages Posted: 18 Jul 2014

See all articles by Nicoletta Batini

Nicoletta Batini

International Monetary Fund (IMF)

Luc Eyraud

International Monetary Fund (IMF)

Anke Weber

International Monetary Fund (IMF)

Date Written: June 2014

Abstract

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.

Keywords: Fiscal stimulus and multipliers, Business cycles, Fiscal consolidation, Fiscal policy, Monetary policy, fiscal multipliers, fiscal shocks, fiscal shock, fiscal measures, government spending, fiscal instruments, defense spending, public expenditure, size of multipliers, discretionary fiscal policy, fiscal stimulus, public debt, fiscal adjustment, fiscal multiplier, fiscal consolidations, tax revenue, fiscal adjustments, government spending multipliers, fiscal instrument, expansionary fiscal, fiscal measure, tax rates, tax policy, fiscal outcomes, revenue collection, taxation, public expenditures, fiscal variables, expansionary fiscal contractions, public spending, fiscal position, fiscal cont

JEL Classification: E32, E62, H50

Suggested Citation

Batini, Nicoletta and Eyraud, Luc and Weber, Anke, A Simple Method to Compute Fiscal Multipliers (June 2014). IMF Working Paper No. 14/93. Available at SSRN: https://ssrn.com/abstract=2468020

Nicoletta Batini (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Luc Eyraud

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Anke Weber

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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