Template-Type: ReDIF-Paper 1.0

Author-Name: Andrea Boitani
Author-X-Name-First: Andrea
Author-X-Name-Last: Boitani
Author-Email: andrea.boitani@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Author-Name: Salvatore Perdichizzi
Author-X-Name-First: Salvatore
Author-X-Name-Last: Perdichizzi

Author-Name: Chiara Punzo
Author-X-Name-First: Chiara
Author-X-Name-Last: Punzo


Title: Nonlinearities and expenditure multipliers in the Eurozone.


Abstract: We analyze the non-linear effects of government spending for the Euro area in recession, by using local projection method and by testing whether the impact of the shock depends crucially on the levels of public debt or the depth of the recession. We provide three insights. First, expenditure mul-tipliers are not strongly state-dependent but they are always above unity. Second, state dependency emerges as soon as deep recession is distinguished from ordinary downturns. Third, fiscal space matters: expenditure multi-pliers are larger in low fiscal space, high debt, South-EZ countries than in low-debt, North-EZ countries. 
Length: 31
Creation-Date: 2020-06
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def089.pdf
File-Format: Application/pdf
File-Function: First version, 2020
Number: def089
Classification-JEL: E32, E62. 
Keywords: Expenditure multipliers, State-dependent fiscal policy, Fiscal consolidation.
Handle: RePEc:ctc:serie1:def089