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Di Serio, M., Fragetta, M., Gasteiger, E. & Melina, G. (2024). The Euro area government spending multiplier in demand- and supply-driven recessions. Oxford Bulletin of Economics and Statistics. 86 (6), 1342-1372
M. D. Serio et al., "The Euro area government spending multiplier in demand- and supply-driven recessions", in Oxford Bulletin of Economics and Statistics, vol. 86, no. 6, pp. 1342-1372, 2024
@article{serio2024_1734884756666, author = "Di Serio, M. and Fragetta, M. and Gasteiger, E. and Melina, G.", title = "The Euro area government spending multiplier in demand- and supply-driven recessions", journal = "Oxford Bulletin of Economics and Statistics", year = "2024", volume = "86", number = "6", doi = "10.1111/obes.12626", pages = "1342-1372", url = "https://onlinelibrary.wiley.com/journal/14680084" }
TY - JOUR TI - The Euro area government spending multiplier in demand- and supply-driven recessions T2 - Oxford Bulletin of Economics and Statistics VL - 86 IS - 6 AU - Di Serio, M. AU - Fragetta, M. AU - Gasteiger, E. AU - Melina, G. PY - 2024 SP - 1342-1372 SN - 0305-9049 DO - 10.1111/obes.12626 UR - https://onlinelibrary.wiley.com/journal/14680084 AB - We estimate government spending multipliers in demand- and supply-driven recessions for the Euro Area. Multipliers in a moderately demand-driven recession are two to three times larger than in a moderately supply-driven recession, with the difference between multipliers being non-zero with very high probability. More generally, multipliers are inversely correlated with the deviation of inflation from its trend, implying that the more demand-driven a recession, the higher the multiplier. Multipliers range from 0.5 in supply-driven recessions to about 2 in demand-driven recessions. The econometric approach leverages a factor-augmented interacted vector-autoregression model purified of expectations (FAIPVAR-X). The model captures the time-varying state of the business-cycle including strongly and moderately demand- and supply-driven recessions, by taking the whole distribution of inflation deviations from trend into account. ER -