measures emphasize that government spending can stimulate additional private spending — the Keynesian multiplier effect. Thus …

We consider the fiscal multiplier and spillover in an environment in which two countries are caught simultaneously in a … show that the fiscal multiplier and spillover are contrary to those predicted in textbook economics. For the country with … government expenditure, the fiscal multiplier exceeds one, the currency depreciates, and the terms of trade worsen. The fiscal …