A Simple Method to Compute Fiscal Multipliers
34 Pages Posted: 18 Jul 2014
Date Written: June 2014
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: Suggested Citation