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We estimate state-dependent government spending multipliers for the United States. We use a Factor-Augmented Interacted Vector Autoregression (FAIVAR) model. This allows us to capture the time-varying monetary policy characteristics including the recent zero interest rate lower bound (ZLB)...
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We calculate the magnitude of the government consumption multiplier in linearized and nonlinear solutions of a New … that the nonlinear solution is associated with a much smaller multiplier than the linearized solution in long …
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