Macroeconomic Effects of Government Spending Shocks: New Narrative Evidence From Canada

32 Pages Posted: 26 Dec 2018

See all articles by Syed Hussain

Syed Hussain

Lahore University of Management Sciences (LUMS)

Lin Liu

University of Liverpool - Management School (ULMS)

Date Written: October 3, 2018

Abstract

This paper examines the macroeconomic effects of government spending shocks in Canada for the period of 1949 - 2012. We use the narrative record, mostly the budget speech, to identify the size, timing, and principal motivation for all planned major government spending changes. To achieve identification, we consider those changes that are unrelated to the contemporaneous movements in the economy. The estimation, using our newly constructed data series on news of future government spending changes or the government spending shocks, shows that the government spending multiplier for Canada ranges from 0:91 to 1:52.

Keywords: Government Spending Shocks, Government Spending Multiplier, Narrative Accounts, Canada

JEL Classification: E62, H3

Suggested Citation

Hussain, Syed and Liu, Lin, Macroeconomic Effects of Government Spending Shocks: New Narrative Evidence From Canada (October 3, 2018). Available at SSRN: https://ssrn.com/abstract=3297476 or http://dx.doi.org/10.2139/ssrn.3297476

Syed Hussain

Lahore University of Management Sciences (LUMS) ( email )

D.H.A, Lahore Cantt
Lahore, Punjab 54792
Pakistan

Lin Liu (Contact Author)

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

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