Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projections
Technical Notes and Manuals, October 2, 2014
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- Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projections
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Bibliographic details
- Authors: Nicoletta Batini, Lorenzo Forni
- Published: October 2, 2014
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9781498382458.005
Summary and purpose
- Fiscal multipliers are important tools for macroeconomic projections and policy design.
- Data availability limits the scope for empirical research in many countries, so little is known about the size of multipliers in those cases.
- The note provides general guidance on:
- definition, measurement, and use of fiscal multipliers;
- literature on multipliers' size, persistence, and determinants;
- a simple method to obtain reasonable values where no reliable estimate exists;
- options to incorporate multipliers in macroeconomic forecasts.
Key findings from the note (literature review focus)
- Reviews the literature related to:
- the size of fiscal multipliers;
- the persistence of multiplier effects;
- determinants of multipliers.
- Emphasizes heterogeneity across countries and episodes due to data limitations and differing structural characteristics.
Method for countries without reliable multiplier estimates
- Proposes a simple method to come up with reasonable multiplier values when no reliable estimate is available.
- The method is presented as practical guidance for forecasters and policy designers facing limited empirical evidence.
Incorporating multipliers in macroeconomic forecasts
- Presents options to incorporate fiscal multipliers in macroeconomic forecasts.
- Focuses on how multipliers can be used operationally in projection exercises and policy analysis.
Subject coverage and keywords
- Subject areas: Automatic stabilizers, Expenditure, Fiscal consolidation, Fiscal multipliers, Fiscal policy, Output gap, Production.
- Keywords include: Fiscal consolidation, fiscal multiplier, fiscal multipliers, Fiscal policy, Global, government spending, multiplier estimate, multipliers in EME, Output gap, revenue management, shock effect, spending, spending shock, stance factor, TNM.