Measuring the Fiscal Multiplier when Plans Take Time to Implement

38 Pages Posted: 6 Feb 2019

See all articles by Kevin Lee

Kevin Lee

University of Nottingham, UK

James Morley

University of Sydney

Kian Howe Ong

University of Nottingham, Malaysia

Kalvinder Shields

University of Melbourne - Department of Economics

Date Written: February 6, 2019

Abstract

The paper describes how to measure the fiscal multiplier using budget statements on planned government spending in the current and following years alongside the data on actual outcomes. The multiplier effects can be decomposed to distinguish the effects of ‘policy reactions’ versus ‘policy initiatives’, with the latter shown to be substantially larger than the former in a study of annual US data over 1957-2016. It is noted that the fiscal initiatives undertaken following the events of 2007/2008 played an important role in mitigating the recessionary effects of the global financial crisis in the US.

Keywords: government spending plans, real-time data, fiscal multiplier

JEL Classification: C32, D84, F44

Suggested Citation

Lee, Kevin and Morley, James and Ong, v and Shields, Kalvinder, Measuring the Fiscal Multiplier when Plans Take Time to Implement (February 6, 2019). CAMA Working Paper No. 13/2019. Available at SSRN: https://ssrn.com/abstract=3329737 or http://dx.doi.org/10.2139/ssrn.3329737

Kevin Lee

University of Nottingham, UK ( email )

United Kingdom

James Morley

University of Sydney ( email )

Rm 370 Merewether (H04)
Sydney, NSW 2006 2008
Australia

HOME PAGE: http://https://sites.google.com/site/jamescmorley/

V Ong

University of Nottingham, Malaysia ( email )

Malaysia

Kalvinder Shields (Contact Author)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

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