Journal
JOURNAL OF ECONOMIC LITERATURE
Volume 49, Issue 3, Pages 673-685Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/jel.49.3.673
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This 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.
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