American Economic Review: Vol. 103 No. 3 (May 2013)


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Output Spillovers from Fiscal Policy

Article Citation

Auerbach, Alan J., and Yuriy Gorodnichenko. 2013. "Output Spillovers from Fiscal Policy." American Economic Review, 103(3): 141-46.

DOI: 10.1257/aer.103.3.141


For a large number of OECD countries we estimate the cross-country spillover effects of government purchases on output. Following the methodology in Auerbach and Gorodnichenko (2012a, b), we allow these multipliers to vary smoothly according to the state of the economy and use real-time forecast data to purge policy innovations of their predictable components. Our findings suggest that cross-country spillovers have an important impact. The findings also confirm those of our earlier papers--namely that fiscal shocks have a larger impact when the affected country is in recession.

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Auerbach, Alan J. (U CA, Berkeley)
Gorodnichenko, Yuriy (U CA, Berkeley)

JEL Classifications

E23: Macroeconomics: Production
E32: Business Fluctuations; Cycles
E62: Fiscal Policy

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