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Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?

Valerie A. Ramey

NBER Working Paper No. 25531
Issued in February 2019
NBER Program(s):Economic Fluctuations and Growth Program, The Monetary Economics Program

This paper takes stock of what we have learned from the “Renaissance” in fiscal research in the ten years since the financial crisis. I first summarize the new innovations in methodology and discuss the various strengths and weaknesses of the main approaches. Reviewing the estimates, I come to the surprising conclusion that the bulk of the estimates for average spending and tax change multipliers lie in a fairly narrow range, 0.6 to 1 for spending multipliers and -2 to -3 for tax change multipliers. However, I identify economic circumstances in which multipliers lie outside those ranges. I conclude by reviewing the debate on whether multipliers were higher on the stimulus spending in the U.S. and the fiscal consolidations in Europe.

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Document Object Identifier (DOI): 10.3386/w25531

Published: Valerie A. Ramey, 2019. "Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?," Journal of Economic Perspectives, vol 33(2), pages 89-114. citation courtesy of

 
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