Government Spending Multipliers Under the Zero Lower Bound: Evidence from Japan

57 Pages Posted: 7 Nov 2016

See all articles by Wataru Miyamoto

Wataru Miyamoto

Bank of Canada

Thuy Lan Nguyen

Santa Clara University

Dmitriy Sergeyev

Bocconi University

Multiple version iconThere are 2 versions of this paper

Date Written: October 29, 2016


Using a rich data set on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). The on-impact output multiplier is 1.5 in the ZLB period, and 0.6 outside of it. We argue that these results are not driven by the amount of slack in the economy. A simple New Keynesian model can reproduce some features of our empirical findings if the ZLB period is caused by a deflationary trap and government spending is not too persistent.

Keywords: fiscal stimulus, multiplier, government spending, zero lower bound

JEL Classification: E32, E62, E5

Suggested Citation

Miyamoto, Wataru and Nguyen, Thuy Lan and Sergeyev, Dmitriy, Government Spending Multipliers Under the Zero Lower Bound: Evidence from Japan (October 29, 2016). Available at SSRN: or

Wataru Miyamoto

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9

HOME PAGE: http://

Thuy Lan Nguyen (Contact Author)

Santa Clara University ( email )

500 El Camino Real
Santa Clara University
Santa Clara, CA California 95053
United States

Dmitriy Sergeyev

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136

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