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This paper proposes a novel method of isolating fluctuations in public spending that are likely to be uncorrelated with contemporaneous macroeconomic shocks and can be used to estimate government spending multipliers. The approach relies on two features unique to many low-income countries: (1)...
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sample of 102 developing countries. The one-year government spending multiplier is reasonably-precisely estimated to be …
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decreases, the "true" long-run multiplier for bad times (and government spending going up) turns out to be 2.3 compared to 1 … fact that the multiplier for recessions and government spending going down (the "when-it-rains-it-pours" phenomenon) is …
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