Artikel
Fiscal spending multiplier calculations based on input-output tables – an application to EU member states
Fiscal spending multiplier calculations have attracted considerable attention in the aftermath of the global financial crisis. Much of the current literature is based on VAR estimation methods and DSGE models. In line with the Keynesian literature we argue that many of these models probably underestimate the fiscal spending multiplier in recessions. The income-expenditure model of the fiscal spending multiplier can be seen as a good approximation under these circumstances. In its conventional form this model suffers from an underestimation of the multiplier due to an overestimation of the import intake of domestic absorption. In this article we apply input-output calculus to solve this problem. Multipliers thus derived are comparably high, ranging between 1.4 and 1.8 for many member states of the European Union. GDP drops due to budget consolidation might therefore be substantial in times of crisis.
- Language
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Englisch
- Bibliographic citation
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Journal: Intervention. European Journal of Economics and Economic Policies ; ISSN: 2195-3376 ; Volume: 09 ; Year: 2012 ; Issue: 1 ; Pages: 129-144
- Classification
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Wirtschaft
History of Economic Thought: Macroeconomics
Input-Output Models
General Aggregative Models: Keynes; Keynesian; Post-Keynesian
Fiscal Policy
- Subject
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fiscal spending multiplier
input-output calculus
income-expenditure model
European Union
- Event
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Geistige Schöpfung
- (who)
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Pusch, Toralf
- Event
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Veröffentlichung
- (who)
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Metropolis-Verlag
- (where)
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Marburg
- (when)
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2012
- DOI
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doi:10.4337/ejeep.2012.01.09
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
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Object type
- Artikel
Associated
- Pusch, Toralf
- Metropolis-Verlag
Time of origin
- 2012
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