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| Home > Research literature > Working papers > Budget constrained expenditure multipliers |
| Home > Research literature > Working papers > Budget constrained expenditure multipliers |
| Date: | 2010 |
| Description: | 9 p. |
| Abstract: | We show that standard expenditure multipliers capture economy-wide effects of new government projects only when financing constraints are not binding. In actual policy making, however, new projects usually need financing. Under liquidity constraints, new projects are subject to two opposite effects: an income effect and a set of spending substitution effects. The former is the traditional, unrestricted, multiplier effect; the latter is the result of expenditure reallocation to upheld effective financing constraints. Unrestricted multipliers will therefore be, as a general rule, upward biased and policy designs based upon them should be reassessed in the light of the countervailing substitution effects. |
| Rights: | Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, i la comunicació pública de l'obra, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original. No es permet la creació d'obres derivades.  |
| Language: | Anglès |
| Series: | Departament d'Economia i d'Història Econòmica. Unitat de Fonaments de l'Anàlisi Econòmica / Institut d'Anàlisi Econòmica (CSIC). Working papers |
| Series: | Working papers ; 804.10 |
| Document: | Working paper |
| Subject: | Despeses públiques ; Pressupost |
