The logic of purchasing power parity (PPP) is compelling, but its evidence is mixed. This paper revisits PPP in 16 developed economies relative to the U.S. over 148 years (1870-2017). We use the ‘system pooled mean group’ (SPMG) model that allows two-way long-run causality between exchange...

The paper describes how to measure the fiscal multiplier using budget statements on planned government spending in the current and following years alongside the data on actual outcomes. The multiplier effects can be decomposed to distinguish the effects of ‘policy reactions' versus ‘policy...