Download or read book Heterogeneous Spending Heterogeneous Multipliers written by Umberto Muratori and published by International Monetary Fund. This book was released on 2023-03-10 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do local fiscal multipliers depend on what the government purchases? We find that government purchases of services have larger effects on employment than spending on goods. Industries producing services are more labor-intensive than industries producing goods. This heterogeneity in labor intensity is an important mechanism behind these results. Spending directed toward labor-intensive industries generates stronger increases in employment and labor income relative to spending toward non-labor-intensive industries.

Download or read book Estimating Fiscal Multipliers with Correlated Heterogeneity written by Emmanouil Kitsios and published by International Monetary Fund. This book was released on 2016-02-04 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate the average fiscal multiplier, allowing multipliers to be heterogeneous across countries or over time and correlated with the size of government spending. We demonstrate that this form of nonseparable unobserved heterogeneity is empirically relevant and address it by estimating a correlated random coefficient model. Using a panel dataset of 127 countries over the period 1994-2011, we show that not accounting for omitted heterogeneity produces a significant downward bias in conventional multiplier estimates. We rely on both crosssectional and time-series variation in spending shocks, exploiting the differential effects of oil price shocks on fuel subsidies, to identify the average government spending multiplier. Our estimates of the average multiplier range between 1.4 and 1.6.

Download or read book Heterogeneous Government Spending Multipliers in the Era Surrounding the Great Recession written by Marco Bernardini and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Household Heterogeneity and the Value of Government Spending Multiplier written by Paweł Kopiec and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Monetary Policy Market Behavior and Fiscal Interventions written by Vasudeva Ramaswamy and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Heterogeneity in behavior and circumstance plays a fundamental role in the economic behavior of agents. In the following essays, I investigate the importance of heterogeneity in three different contexts, using distinct modeling and estimation techniques.In the first essay, I study cyclical and distributional dynamics in an economy where capacity utilization choices are explicitly modeled. The axis of heterogeneity I consider lies in the production sector. In the model, firms face idiosyncratic demand uncertainty, and choose input factors (including labor) prior to observing their individual demand. When demand is realized, output is produced by varying labor effort, subject to the capacity limit implied by the firm's chosen input levels. A key feature in the setup is that productivity and capacity utilization are both procyclical in response to demand shocks. This framework admits three scenarios that are consistent with the empirical evidence, but not possible in a standard new Keynesian model. First, markups can be procyclical as firms internalize the increased probability of being capacity constrained in response to expansionary demand shocks. Second, the labor share can be counter-cyclical for the "right reasons", i.e., when labor productivity is more procyclical than wages. Finally, inflation exhibits a hump-shaped response as procyclical productivity mitigates upward pressure on prices, even though pricing is purely forward-looking. The essay investigates the conditions under which these outcomes are obtained, and sheds light on the distributional role played by nominal price and wage rigidities. Crucially, inflation can reflect both the rigidities that drive markups as well as the dynamics of firm cost.In the second essay, I use a simple order-driven model of financial-market microstructure to investigate the volatility consequences of heterogeneous forecasting and trading strategies. Specifically, I investigate if the determinants of order size decisions can produce volatility clustering. I start with the model in Chiarella and Iori (2002), where near-zero-intelligence agents interact indirectly through a limit order book. To this baseline, I add volatility-based shading (LeBaron and Palmer, 2019), where trader behavior alters in response to price volatility. I revisit the findings of LeBaron-Palmer studies, focusing on the features that generate volatility clustering, and extend shading strategies to traders' order-size decisions. I call this quantity shading. In the resulting model, order size depends on price aggressiveness and traders' response to market volatility. The main finding is that when liquidity-providing traders are more quantity sensitive to volatility than liquidity-consuming traders, returns series exhibit clustering and long-range persistence in volatility.In the final essay (co-authored with Gabriel Mathy), we use heterogeneity in the implementation of a state-level spending program to recover estimates of the fiscal multiplier. Louisiana Governor Huey Long embarked on an ambitious public works and educational spending program on the eve of the Great Depression. We use the variation in state- and parish-level spending prevailing in the economy over the 1930s to estimate fiscal multipliers in the Great Depression. We find a multiplier of roughly 1 for the entire 1929-1939 period and about 1.25 for the 1929-1933 period. These estimates are similar to other studies in the Great Depression like Fishback and Kachanovskaya (2015), but lower than some modern studies at the zero lower bound that estimate the multiplier to be closer to 1.7-1.8 (Chodorow-Reich, 2019). We discuss factors that could explain the lower multipliers amidst record economic slack including a high share of imports, low level of human capital, small domestic production capacity, and corruption. We propose a corruption dismultiplier where corruption results in a lower fiscal multiplier due to measurement error. We use the records of indictments for corruption in the 1939-1940 Louisiana Scandals to try to correct for this error and find larger multipliers if we assume skimming of 92%.

Download or read book Fiscal Multipliers in Advanced and Developing Countries written by Viacheslav Sheremirov and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using novel data on military spending for 129 countries in the period 1988-2013, this paper provides new evidence on the effects of government spending on output in advanced and developing countries. Identifying government-spending shocks with an exogenous variation in military spending, we estimate one-year fiscal multipliers in the range 0.75-0.85. The cumulative multipliers remain significantly different from zero within three years after the shock. We find substantial heterogeneity in the multipliers across groups of countries. We then explore three potential sources leading to heterogeneous effects of fiscal policy: the state of the economy, openness to trade, and the exchange-rate regime. We find that the multipliers are especially large in recessions, in closed economies, and under a fixed exchange rate. We also discuss other potential reasons for heterogeneous effects of fiscal policy, such as its implementation and coordination with the monetary authority.

Download or read book How Big Small are Fiscal Multipliers written by Ethan Ilzetzki and published by International Monetary Fund. This book was released on 2011-03-01 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero.

Download or read book Heterogeneity and Persistence in Returns to Wealth written by Andreas Fagereng and published by International Monetary Fund. This book was released on 2018-07-27 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a systematic analysis of the properties of individual returns to wealth using twelve years of population data from Norway’s administrative tax records. We document a number of novel results. First, during our sample period individuals earn markedly different average returns on their financial assets (a standard deviation of 14%) and on their net worth (a standard deviation of 8%). Second, heterogeneity in returns does not arise merely from differences in the allocation of wealth between safe and risky assets: returns are heterogeneous even within asset classes. Third, returns are positively correlated with wealth: moving from the 10th to the 90th percentile of the financial wealth distribution increases the return by 3 percentage points - and by 17 percentage points when the same exercise is performed for the return to net worth. Fourth, wealth returns exhibit substantial persistence over time. We argue that while this persistence partly reflects stable differences in risk exposure and assets scale, it also reflects persistent heterogeneity in sophistication and financial information, as well as entrepreneurial talent. Finally, wealth returns are (mildly) correlated across generations. We discuss the implications of these findings for several strands of the wealth inequality debate.

Download or read book Heterogeneous Consumers and Fiscal Policy Shocks written by Emily B. Anderson and published by . This book was released on 2013 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies stylized empirical facts regarding the effects of unexpected changes in aggregate macroeconomic fiscal policies on consumers that are allowed to differ depending on their individual characteristics. We use data from the Consumption Expenditure Survey (CEX) to estimate individual-level impulse responses as well as multipliers for government spending and tax policy shocks. The main empirical finding of this paper is that unexpected fiscal shocks have substantially different effects on consumers depending on their age, income levels, and education. In particular, the wealthiest individuals tend to behave according to the predictions of standard RBC models, whereas the poorest individuals tend to behave according to standard IS-LM (non-Ricardian) models, due to credit constraints. Furthermore, government spending policy shocks tend to decrease consumption inequality, whereas tax policy shocks most negatively affect the lives of the poor, more so than the rich, thus increasing consumption inequality.

Download or read book Estimating Local Fiscal Multipliers written by Juan Carlos Suárez Serrato and published by . This book was released on 2016 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt: We propose a new source of cross-sectional variation that may identify causal impacts of government spending on the economy. We use the fact that a large number of federal spending programs depend on local population levels. Every ten years, the Census provides a count of local populations. Since a different method is used to estimate non-Census year populations, this change in methodology leads to variation in the allocation of billions of dollars in federal spending. Our baseline results follow a treatment-effects framework where we estimate the effect of a Census Shock on federal spending, income, and employment growth by re-weighting the data based on an estimated propensity score that depends on lagged economic outcomes and observed economic shocks. Our estimates imply a local income multiplier of government spending between 1.7 and 2, and a cost per job of $30,000 per year. A complementary IV estimation strategy yields similar estimates. We also explore the potential for spillover effects across neighboring counties but we do not find evidence of sizable spillovers. Finally, we test for heterogeneous effects of government spending and find that federal spending has larger impacts in low-growth areas.

Download or read book Fiscal Policy after the Financial Crisis written by Alberto Alesina and published by University of Chicago Press. This book was released on 2013-06-25 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth. Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty over the sustainability of recent economic policies, further contributions to this volume discuss the merits of alternate means of debt reduction through decreased government spending or increased taxes. A final section examines how the short-term political forces driving fiscal policy might be balanced with aspects of the long-term planning governing monetary policy. A direct intervention in timely debates, Fiscal Policy after the Financial Crisis offers invaluable insights about various responses to the recent financial crisis.

Download or read book Building Back Better How Big Are Green Spending Multipliers written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-03-19 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides estimates of output multipliers for spending in clean energy and biodiversity conservation, as well as for spending on non-ecofriendly energy and land use activities. Using a new international dataset, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar’s worth of economic activity. Although not all green and non-ecofriendly expenditures in the dataset are strictly comparable due to data limitations, estimated multipliers associated with spending on renewable and fossil fuel energy investment are comparable, and the former (1.1-1.5) are larger than the latter (0.5-0.6) with over 90 percent probability. These findings survive several robustness checks and lend support to bottom-up analyses arguing that stabilizing climate and reversing biodiversity loss are not at odds with continuing economic advances.

Download or read book Post crisis Fiscal Policy written by Carlo Cottarelli and published by MIT Press. This book was released on 2014-06-27 with total page 575 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Fiscal policy makers have faced an extraordinarily challenging environment over the last few years. At the outset of the global financial crisis, the International Monetary Fund (IMF) for the first time advocated a fiscal expansion across all countries able to afford it, a seeming departure from the long-held consensus among economists that monetary policy rather than fiscal policy was the appropriate response to fluctuations in economic activity. Since then, the IMF has emphasized that the speed of fiscal adjustment should be determined by the specific circumstances in each country. Its recommendation that deficit reduction proceed steadily, but gradually, positions the IMF between the fiscal doves (who argue for postponing fiscal adjustment altogether) and the fiscal hawks (who argue for a front-loaded adjustment). This volume brings together the analysis underpinning the IMF's position on the evolving role of fiscal policy. After establishing its analytical foundation, with chapters on such topics as fiscal risk and debt dynamics, the book analyzes the buildup of fiscal vulnerabilities before the crisis, presents the policy response during the crisis, discusses the fiscal outlook and policy challenges ahead, and offers lessons learned from the crisis and its aftermath. Topics discussed include a historical view of debt accumulation; the timing, size, and composition of fiscal stimulus packages in advanced and emerging economies; the heated debate surrounding the size of fiscal multipliers and the effectiveness of fiscal policy as a countercyclical tool; coordination of fiscal and monetary policies; the sovereign debt crisis in Europe; and institutional reform aimed at fostering fiscal discipline."--Publisher's description.

Download or read book Estimating Fiscal Multipliers with Correlated Heterogeneity written by Emmanouil Kitsios and published by International Monetary Fund. This book was released on 2016-02-04 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate the average fiscal multiplier, allowing multipliers to be heterogeneous across countries or over time and correlated with the size of government spending. We demonstrate that this form of nonseparable unobserved heterogeneity is empirically relevant and address it by estimating a correlated random coefficient model. Using a panel dataset of 127 countries over the period 1994-2011, we show that not accounting for omitted heterogeneity produces a significant downward bias in conventional multiplier estimates. We rely on both crosssectional and time-series variation in spending shocks, exploiting the differential effects of oil price shocks on fuel subsidies, to identify the average government spending multiplier. Our estimates of the average multiplier range between 1.4 and 1.6.

Download or read book Can Government Demand Stimulate Private Investment Evidence from U S Federal Procurement written by Shafik Hebous and published by International Monetary Fund. This book was released on 2016-03-10 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of federal purchases on firms’ investment using a novel panel dataset that combines federal procurement contracts in the United States with key financial firm-level information. We find that 1 dollar of federal spending increases firms’ capital investment by 7 to 11 cents. The average effect masks heterogeneity: Effects are stronger for firms that face financing constraints and they are close to 0 for unconstrained firms. In line with the financial accelerator model, our findings indicate that the effect of government purchases works through easing firms’ access to external borrowing. Furthermore, industry-level analysis suggests that that the increase in investment at the firm level translates into an industry-wide effect without crowding-out capital investment of other firms in the same industry.

Download or read book The Euro Area Government Spending Multiplier at the Effective Lower Bound written by Adalgiso Amendola and published by International Monetary Fund. This book was released on 2019-06-28 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: We build a factor-augmented interacted panel vector-autoregressive model of the Euro Area (EA) and estimate it with Bayesian methods to compute government spending multipliers. The multipliers are contingent on the overall monetary policy stance, captured by a shadow monetary policy rate. In the short run (one year), whether the fiscal shock occurs when the economy is at the effective lower bound (ELB) or in normal times does not seem to matter for the size of the multiplier. However, as the time horizon increases, multipliers diverge across the two regimes. In the medium run (three years), the average multiplier is about 1 in normal times and between 1.6 and 2.8 at the ELB, depending on the specification. The difference between the two multipliers is distributed largely away from zero. More generally, the multiplier is inversely correlated with the level of the shadow monetary policy rate. In addition, we verify that EA data lend support to the view that the multiplier is larger in periods of economic slack, and we show that the shadow rate and the state of the business cycle are autonomously correlated with its size. The econometric approach deals with several technical problems highlighted in the empirical macroeconomic literature, including the issues of fiscal foresight and limited information.

Download or read book The Encyclopedia of Crime and Punishment written by Wesley G. Jennings and published by John Wiley & Sons. This book was released on 2016-01-19 with total page 1452 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Encyclopedia of Crime and Punishment provides the most comprehensive reference for a vast number of topics relevant to crime and punishment with a unique focus on the multi/interdisciplinary and international aspects of these topics and historical perspectives on crime and punishment around the world. Named as one of Choice's Outstanding Academic Titles of 2016 Comprising nearly 300 entries, this invaluable reference resource serves as the most up-to-date and wide-ranging resource on crime and punishment Offers a global perspective from an international team of leading scholars, including coverage of the strong and rapidly growing body of work on criminology in Europe, Asia, and other areas Acknowledges the overlap of criminology and criminal justice with a number of disciplines such as sociology, psychology, epidemiology, history, economics, and public health, and law Entry topics are organized around 12 core substantive areas: international aspects, multi/interdisciplinary aspects, crime types, corrections, policing, law and justice, research methods, criminological theory, correlates of crime, organizations and institutions (U.S.), victimology, and special populations Organized, authored and Edited by leading scholars, all of whom come to the project with exemplary track records and international standing 3 Volumes www.crimeandpunishmentencyclopedia.com