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The international effect of US government expenditure

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  • Carmignani, Fabrizio

Abstract

The paper estimates a system of structural equations to determine the effect of US government expenditure on the business cycle of other OECD countries. The estimated coefficients from the system are used in a simulation exercise to compute the dollar value of the international multiplier of the US government expenditure. This multiplier turns out to be positive: an extra dollar of the US government expenditure increases foreign output by 7 cents on average. However, the size of the multiplier significantly differs across sub-samples of countries and over time.

Suggested Citation

  • Carmignani, Fabrizio, 2015. "The international effect of US government expenditure," Economic Modelling, Elsevier, vol. 47(C), pages 63-73.
    • Handle: RePEc:eee:ecmode:v:47:y:2015:i:c:p:63-73
    DOI: 10.1016/j.econmod.2015.02.011
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