UC San Diego
Ten Years After the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?
- Author(s): Ramey, Valerie A
- et al.
Published Web Locationhttps://doi.org/10.1257/jep.33.2.89
This paper takes stock of what we have learned from the “Renaissance” in fiscal research in the ten years since the financial crisis. I first discuss the new innovations in methodology and various strengths and weaknesses of the main approaches to estimating fiscal multipliers. Reviewing the estimates, I come to the surprising conclusion that the bulk of the estimates for average spending and tax change multipliers lie in a fairly narrow range, 0.6 to 1 for spending multipliers and -2 to -3 for tax change multipliers. However, I identify economic circumstances in which multipliers lie outside those ranges. Finally, I review the debate on whether multipliers were higher for the 2009 Obama stimulus spending in the United States or for fiscal consolidations in Europe.