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The dynamic effects of public expenditure shocks in the United States

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  • Párraga Rodríguez, Susana

Abstract

This paper estimates the dynamic aggregate effects of exogenous shocks to two key components of public expenditure in the United States, government income transfers and government spending. The identification strategy positions the structural shocks to public expenditure in an SVAR framework with exogenous measures of public expenditure changes. Transfers shocks are based on a new narrative variable of legislated increases in U.S. social security benefits. I demonstrate that shocks to different types of public expenditure do not have the same macroeconomic impact. The estimated government spending multiplier is between 0 and 1, while increases in transfers generate a multiplier effect above 1.

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  • Párraga Rodríguez, Susana, 2018. "The dynamic effects of public expenditure shocks in the United States," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 340-360.
    • Handle: RePEc:eee:jmacro:v:56:y:2018:i:c:p:340-360
    DOI: 10.1016/j.jmacro.2018.04.005
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    2. El Mostafa Bentour, 2022. "The effects of public debt accumulation and business cycle on government spending multipliers," Applied Economics, Taylor & Francis Journals, vol. 54(19), pages 2231-2256, April.

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    More about this item

    Keywords

    Government expenditures; Transfer payments; Social security;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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