State-dependent effects of fiscal policy

Fazzari, Steven and Morley, James and Irina, Panovska (2015) State-dependent effects of fiscal policy. Studies in Nonlinear Dynamics and Econometrics, 19 (3). pp. 285-315. ISSN 1558-3708

Full text not available from this repository.

Abstract

We investigate the effects of government spending on US output with a threshold structural vector autoregressive model. We consider Bayesian model comparison and generalized impulse response analysis to test for nonlinearities in the responses of output to government spending. Our empirical findings support state-dependent effects of fiscal policy, with the government spending multiplier larger and more persistent whenever there is considerable economic slack. Based on capacity utilization as the preferred threshold variable, the estimated multiplier is large (1.6) for a low-utilization regime that accounts for more than half of the sample observations from 1967 to 2012 according to the estimated threshold level.

Item Type:
Journal Article
Journal or Publication Title:
Studies in Nonlinear Dynamics and Econometrics
ID Code:
130549
Deposited By:
Deposited On:
14 Jan 2019 16:15
Refereed?:
Yes
Published?:
Published
Last Modified:
23 Sep 2020 04:56