Can Government Purchases Stimulate the Economy?
- (pp. 673-85)
AbstractThis essay briefly reviews the state of knowledge about the government spending multiplier. Drawing on theoretical work, aggregate empirical estimates from the United States, as well as cross-locality estimates, I assess the likely range of multiplier values for the experiment most relevant to the stimulus package debate: a temporary, deficit-financed increase in government purchases. I conclude that the multiplier for this type of spending is probably between 0.8 and 1.5. ( JEL E23, E62, H50)
CitationRamey, Valerie A. 2011. "Can Government Purchases Stimulate the Economy?" Journal of Economic Literature, 49 (3): 673-85. DOI: 10.1257/jel.49.3.673
- E23 Macroeconomics: Production
- E62 Fiscal Policy
- H50 National Government Expenditures and Related Policies: General