Fiscal Multipliers

By Antonio Spilimbergo, Martin Schindler, Steven A. Symansky

May 20, 2009

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Antonio Spilimbergo, Martin Schindler, and Steven A. Symansky Fiscal Multipliers, (USA: International Monetary Fund, 2009) accessed December 26, 2024

Summary

This paper provides background information for policymakers on fiscal multipliers, including quantitative estimates. The fiscal multiplier is the ratio of a change in output to an exogenous change in the fiscal deficit with respect to their respective baselines. The size of the multiplier is larger if: leakages are few; the monetary conditions are accommodative; and the country’s fiscal position after the stimulus is sustainable. Fiscal expansions can be contractionary if they decrease consumers’ and investors’ confidence, especially if the fiscal expansion raises, or reinforces, fiscal sustainability concerns. Fiscal multipliers have been calculated for some countries but should be carefully re-examined considering the current events. The degree of financial market development has an ambiguous effect on multipliers, depending on how the degree of financial development affects liquidity constraints, and the government’s ability to finance the fiscal deficit. The past research on multiplier estimates can provide guidance in developing multiplier estimates, but judgment, based on current conditions, is important.

Subject: Corporate income tax, Fiscal multipliers, Fiscal policy, Fiscal stimulus, Income and capital gains taxes, Revenue administration, Tax refunds, Taxes

Keywords: Corporate income tax, Fiscal multipliers, Fiscal stimulus, Global, IMF staff note, Income and capital gains taxes, Interest rate, Interest rate response, Monetary policy indicator, Multiplier, Multiplier estimate, SPN, Tax rebate, Tax refunds, Taylor interest rate rule

Publication Details

Pages:

14
Volume:

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DOI:

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Issue:

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Series:

Staff Position Note No. 2009/011
Stock No:

SPNEA2009011
ISBN:

9781462372737
ISSN:

2617-6742

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