Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?

By Gabriel Chodorow-reich. American Economic Journal: Economic Policy, 2019

285 citations recorded by the source corpus.

A geographic cross-sectional fiscal spending multiplier measures the effect of an increase in spending in one region of a monetary union. Empirical studies of such multipliers have proliferated. I review this research and what the evidence implies for national multipliers. Based on an updated analysis of the ARRA and a survey of empirical studies, my preferred point estimate for a cross-sectional multiplier is 1.8. The paper also discusses conditions under which the cross-sectional multiplier provides a rough lower bound for the national, no-monetary-policy-response multiplier. Putting these elements together, the cross-sectional evidence suggests a national no-monetary-policy-response multiplier of 1.7 or above. (JEL E32, E52, E62, H54, H76, R53)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/45fbf50979b889d33c38f1f36cd5f4123e74e080

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Citations in the corpus

• The Aggregate Implications of Regional Business Cycles (2019, unknown): “Nakamura and Steinsson (2014) and Chodorow-Reich (2018) used sub-national U.S. variation to inform the size of local government spending multipliers.”
• The financing of local government in China: Stimulus loan wanes and shadow banking waxes (2020, background): “Exploiting the arguably exogenous cross-state variations in highway grants thanks to the pre-existing formulas for grants allocation, researchers investigate the multiplier effect of the ARRA as well as its employment effect; for a recent survey, see Chodorow-Reich (2019) .”