Texas A&M University
Information about this author at RePEc
NBER Working Papers and Publications
|November 2014||Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data|
with Valerie A. Ramey: w20719
This paper investigates whether U.S. government spending multipliers differ according to two potentially important features of the economy: (1) the amount of slack and (2) whether interest rates are near the zero lower bound. We shed light on these questions by analyzing new quarterly historical U.S. data covering multiple large wars and deep recessions. We estimate a state-dependent model in which impulse responses and multipliers depend on the average dynamics of the economy in each state. We find no evidence that multipliers differ by the amount of slack in the economy. These results are robust to many alternative specifications. The results are less clear for the zero lower bound. For the entire sample, there is no evidence of elevated multipliers near the zero lower bound. When...
|February 2013||Are Government Spending Multipliers Greater During Periods of Slack? Evidence from 20th Century Historical Data|
with Michael T. Owyang, Valerie A. Ramey: w18769
A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and Canada. Using an extension of Ramey's (2011) military news series and Jordà's (2005) method for estimating impulse responses, we find no evidence that multipliers are greater during periods of high unemployment in the U.S. In every case, the estimated multipliers are below unity. We do find some evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.
Published: Owyang, Michael T., Valerie A. Ramey, and Sarah Zubairy. 2013. "Are Government Spending Multipliers Greater during Periods of Slack? Evidence from Twentieth-Century Historical Data." American Economic Review, 103(3): 129-34.