DESPERATE TIMES CALL FOR DESPERATE MEASURES: GOVERNMENT SPENDING MULTIPLIERS IN HARD TIMES

@article{Shin2019DESPERATETC,
  title={DESPERATE TIMES CALL FOR DESPERATE MEASURES: GOVERNMENT SPENDING MULTIPLIERS IN HARD TIMES},
  author={Youngki Shin and Myung Hwan Seo and Yuan Liao and Sokbae (Simon) Lee},
  journal={Economic Inquiry},
  year={2019},
  volume={58},
  pages={1949 - 1957}
}
We investigate state‐dependent effects of fiscal multipliers and allow for endogenous sample splitting to determine whether the U.S. economy is in a slack state. When the endogenized slack state is estimated as the period of the unemployment rate higher than about 12%, the estimated cumulative multipliers are significantly larger during slack periods than nonslack periods and are above unity. We also examine the possibility of time‐varying regimes of slackness and find that our empirical… 
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