TY  - JOUR
AU  - Auerbach,Alan J.
AU  - Gorodnichenko,Yuriy
TI  - Measuring the Output Responses to Fiscal Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16311
PY  - 2010
Y2  - August 2010
UR  - http://www.nber.org/papers/w16311
L1  - http://www.nber.org/papers/w16311.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
530 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu

Yuriy Gorodnichenko
Department of Economics
508-1 Evans Hall #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0720
Fax: 510/642-6615
E-Mail: ygorodni@econ.berkeley.edu
M3  - presented at "TAPES Conference", June 14-16, 2010
AB  - A key issue in current research and policy is the size of fiscal multipliers when the economy is in recession.  Using a variety of methods and data sources, we provide three insights. First, using regime-switching models, we estimate effects of tax and spending policies that can vary over the business cycle; we find large differences in the size of fiscal multipliers in recessions and expansions with fiscal policy being considerably more effective in recessions than in expansions.  Second, we estimate multipliers for more disaggregate spending variables which behave differently in relation to aggregate fiscal policy shocks, with military spending having the largest multiplier.  Third, we show that controlling for predictable components of fiscal shocks tends to increase the size of the multipliers.
ER  -