On the Government-Expenditure Multipliers and the Choice of Development Agendas
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| Title | On the Government-Expenditure Multipliers and the Choice of Development Agendas
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| Author | Gu Yanwei, Jin Yu and Tian Guoqiang |
| Organization | Shanghai University of Finance and Economics |
| Email | yanwei_gu@163.com；jinyu@mail.shufe.edu.cn；gtian@exchange.tamu.edu |
| Key Words | Government Expenditure Multiplier; Local Projection Method; State Dependence; Development Agenda |
| Abstract | The paper identifies the China’s government expenditure shocks from 1992Q1 to 2015Q4. We estimate the government expenditure multipliers using linear and state dependent local projection methods, and separate the multipliers by government consumption and investment. Our results show: the government expenditure multipliers are different across states with a higher value in the developing periods than in the expanding periods, which means that the government expenditure will stabilize the economic growth during the developing periods. We also find that during the expanding periods, the multipliers are smaller than 1, which means that the government expenditure crowds out the private expenditure. Further investigation finds that the government investment multiplier is larger than the government consumption multiplier. In the developing periods, the government investment multiplier is larger than 1, which means that the government investment has a stronger effect to stabilize the economy than the government consumption. However, in the expanding periods, the government investment multiplier is smaller than the government consumption multiplier, implying government investment has more negative effect on the economy. The paper provides useful results for the government to choose its development agendas and tools to implement the economic development. |
| Serial Number | WP1389 |
| Time | 2019-07-09 |
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