Do Government Spending Multipliers Depend on the Sign of the Shock? / Nadav Ben Zeev, Valerie A. Ramey, Sarah Zubairy.

Format:

Book

Author/Creator:

Ben Zeev, Nadav.

Contributor:

National Bureau of Economic Research.

Ramey, Valerie A.

Zubairy, Sarah.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31015.

NBER working paper series no. w31015

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

We analyze whether government spending multipliers differ by the sign of the shock. Using aggregate historical U.S. data, we apply Ben Zeev's (2020) nonlinear diagnostic tests and find evidence of nonlinearities in the impulse response functions of both government spending and GDP. We then extend Ramey and Zubairy's (2018) framework to allow for asymmetric effects as a type of state dependence to estimate multipliers. While we find differences in the impulse response functions, the resulting multipliers do not differ by sign of the shock. Thus, we find no evidence of asymmetry of government spending multipliers.

Notes:

Print version record

March 2023.