A functional classification analysis of government spending multipliers

41 Pages Posted: 31 Aug 2022

See all articles by Panagiotis Konstantinou

Panagiotis Konstantinou

Athens University of Economics and Business

Andromachi Partheniou

University of Patras

Athanasios Tagkalakis

Bank of Greece; University of Patras

Date Written: June 1, 2022

Abstract

Using a panel of 33 OECD countries we estimate government spending multipliers for 11 different categories (functions) of spending: General Public Services, Defense, Public Order and Safety, Transport & Communication, Economic Services, Environment Protection, Housing and Community Amenities, Health, Education, Recreation, Culture and Religion, and Social Protection. We also account for variations in the state of the business cycle (recession vs expansion). Our results suggest that Public Services, Defense, Public Order, Transport &Communication, Health, Recreation and Education produce positive and high multipliers, whereas multipliers for Economic Services are negative, and multipliers for Environmental Protection, Housing and Social Protection are insignificant. In addition, multipliers for Public Services, Defense, Public Order, Transport & Communication, Health, Recreation and Education are higher in recession than in expansion.

Keywords: Government Spending Multipliers, Functional Classification, State-Dependent Multipliers, Local Projections, Smooth-Transition Models

JEL Classification: C33, E32, E62

Suggested Citation

Konstantinou, Panagiotis and Partheniou, Andromachi and Tagkalakis, Athanasios, A functional classification analysis of government spending multipliers (June 1, 2022). Bank of Greece Working Paper No. 298
DOI: https://doi.org/10.52903/wp2022298, Available at SSRN: https://ssrn.com/abstract=4144686 or http://dx.doi.org/10.2139/ssrn.4144686

Panagiotis Konstantinou

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece
+302108203197 (Phone)

Andromachi Partheniou

University of Patras

Athanasios Tagkalakis (Contact Author)

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

University of Patras

Patra
Greece

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