Article ID Journal Published Year Pages File Type
5084281 International Review of Economics & Finance 2006 24 Pages PDF
Abstract
Using annual data for the United States, the paper investigates the evidence of variation in the fiscal multiplier with the method of financing government spending. The fiscal multiplier varies in the face of positive and negative shocks and across methods of financing. In general, fiscal expansion appears insignificant on aggregate demand and economic activity. In contrast, the evidence presents a number of significant negative multipliers in the face of fiscal contraction. The combined evidence challenges the effectiveness of fiscal policy and supports arguments to restrain fiscal expansion in an effort to stimulate the economy.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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