Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan

By Wataru Miyamoto, T. Nguyen, D. Sergeyev. American Economic Journal: Macroeconomics, 2018

155 citations recorded by the source corpus.

Using a rich dataset on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). The on-impact output multiplier is 1.5 in the ZLB period and 0.6 outside of it. We estimate that government spending shocks increase both private consumption and investment during the ZLB period, but crowd them out in the normal period. There is evidence that expected inflation increases more in the ZLB period than in the normal period. (JEL E21, E22, E23, E31, E43, E52, E62)

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/eb1f04474d500351186c4c664e4963a8bd43d932

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In Economics and Econometrics

Citations in the corpus

Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned? (2019, result): “31One recent study of national multipliers in Japan which explicitly distinguishes zero lower bound episodes indeed finds higher multipliers in such periods, with a magnitude in line with the cross-sectional evidence (Miyamoto et al., 2017).”