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This article addresses the existence of a wide range of estimated government spending multipliers in a dynamic stochastic general equilibrium model of the euro area. Our estimation results and counterfactual exercises provide evidence that omitting the interactions of key ingredients at the...
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-called r-g. Whether the fiscal shock occurs when r-g is positive or negative matters for the size of the multiplier. Median … multiplier is inversely correlated with r-g. The calculations are based on the estimates of a factor-augmented interacted panel …
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inflation from its trend, implying that the more demand-driven a recession, the higher the multiplier. Median multipliers range …
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