US Fiscal Multiplier Estimates by Economic State (Auerbach & Gorodnichenko, 2012)
According to a 2012 study by Auerbach and Gorodnichenko, the fiscal multiplier in the US varies significantly with the economic cycle. They estimated that a $1 increase in government spending boosts economic output by approximately $1.50 to $2.00 during a recession, whereas the same spending increase only yields about $0.50 in additional output during an economic expansion.
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Introduction to Macroeconomics Course
Ch.5 Macroeconomic policy: Inflation and unemployment - The Economy 2.0 Macroeconomics @ CORE Econ
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US Fiscal Multiplier Estimates by Economic State (Auerbach & Gorodnichenko, 2012)
International Spillover Effects of Fiscal Stimulus
A government is considering a significant increase in public spending to fund new infrastructure projects. Based on the principle that the economic impact of such spending can vary depending on the prevailing economic conditions, in which scenario would this policy likely generate the largest increase in national output?
Evaluating Fiscal Policy Timing
Rationale for State-Dependent Policy Effects
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Empirical economic research suggests that a government's decision to increase spending by a specific amount will have a consistent and predictable effect on national output, irrespective of whether the economy is experiencing high or low unemployment.
A government is considering a fiscal stimulus package. Match each economic scenario with the most likely resulting change in national output from a given increase in government spending.
Analyzing a Policy Debate on Fiscal Stimulus
Global Implications of Domestic Fiscal Policy
Empirical studies on the impact of fiscal policy suggest that an increase in government spending will have a significantly ____ effect on economic output when the economy is operating below its potential compared to when it is operating at or near full capacity.
Evaluating Competing Fiscal Policy Advice
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Fiscal Policy Effectiveness
Imagine a country is experiencing a severe economic downturn, characterized by two consecutive quarters of negative GDP growth and rising unemployment. If the government decides to increase its spending by $100 billion on infrastructure projects, what is the most plausible estimated impact on the country's total economic output, based on findings about how such spending works in different economic conditions?
Based on empirical findings regarding the impact of government spending, a $1 billion increase in government purchases will consistently result in an increase in total economic output of more than $1 billion, irrespective of whether the economy is in a recession or an expansion.
Evaluating the Timing of Fiscal Stimulus
Calculating State-Dependent Fiscal Impact
A government is considering a large infrastructure spending package. According to economic research on the effects of such spending, why would this package likely have a larger positive impact on total economic output if enacted during a recession compared to during an economic expansion?
Evaluating Fiscal Policy in an Economic Boom
Evaluating Competing Fiscal Projections
A country is experiencing a severe recession with high unemployment. A government advisor argues against a proposed $50 billion stimulus package, stating, 'Our historical data shows that, on average, the fiscal multiplier is only 0.8. This spending will not generate enough economic activity to be worthwhile.' What is the most significant flaw in this advisor's reasoning, based on empirical findings about how government spending impacts the economy under different conditions?
Evaluating Competing Fiscal Policy Proposals