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The asymmetric government spending multipliers: Evidence from US regions

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  • Lu, Jiajun
  • Zhu, Yueteng

Abstract

This paper tests the asymmetry in government spending multipliers using the panel data in the US postwar states. Empirical results show that output and employment rate respond asymmetrically to military procurement spending shocks with different signs and magnitudes. Our findings suggest that expansionary multipliers are much larger than contractionary multipliers, and that small-scale spending shocks tend to have a greater impact than large-scale ones.

Suggested Citation

  • Lu, Jiajun & Zhu, Yueteng, 2021. "The asymmetric government spending multipliers: Evidence from US regions," Economics Letters, Elsevier, vol. 208(C).
    • Handle: RePEc:eee:ecolet:v:208:y:2021:i:c:s0165176521003335
    DOI: 10.1016/j.econlet.2021.110056
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    References listed on IDEAS

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    More about this item

    Keywords

    Government spending; Asymmetric effect; Multiplier; Economic output;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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