The DOI matches its Crossref record; 23 of the 23 references it cites were found in a registry or an index.
Macroeconomic Effects From Government Purchases and Taxes *
Abstract
For U.S. annual data that include World War II, the estimated multiplier for temporary defense spending is 0.4–0.5 contemporaneously and 0.6–0.7 over 2 years. If the change in defense spending is “permanent” (gauged by Ramey's defense news variable), the multipliers are higher by 0.1–0.2. Since all estimated multipliers are significantly less than 1, greater spending crowds out other components of GDP, particularly investment. The lack of good instruments prevents estimation of reliable multipliers for nondefense purchases; multipliers in the literature of two or more likely reflect reverse causation from GDP to nondefense purchases. Increases in average marginal income tax rates (measured by a newly constructed time series) have significantly negative effects on GDP. When interpreted as a tax multiplier, the magnitude is around 1.1. The combination of the estimated spending and tax multipliers implies that the balanced-budget multiplier for defense spending is negative. We have some evidence that tax changes affect GDP mainly through substitution effects, rather than wealth effects.
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Citations
Cites
On the Determination of the Public Debt
Barro, R. J. (1979) · Journal of Political Economy · doi:10.1086/260807 · Cited by 3,268
Self-citationBlanchard, O., & Perotti, R. (2002) · The Quarterly Journal of Economics · doi:10.1162/003355302320935043 · Cited by 2,910
The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks
Romer, C. D., & Romer, D. H. (2010) · American Economic Review · doi:10.1257/aer.100.3.763 · Cited by 2,091
Blanchard, O., & Perotti, R. (1999) · National Bureau of Economic Research · doi:10.3386/w7269 · Cited by 1,890
Shadow Prices, Market Wages, and Labor Supply
Heckman, J. (1974) · Econometrica · doi:10.2307/1913937 · Cited by 1,852
Identifying Government Spending Shocks: It's all in the Timing*
Ramey, V. A. (2011) · The Quarterly Journal of Economics · doi:10.1093/qje/qjq008 · Cited by 1,661
Forecasting Output and Inflation: The Role of Asset Prices
Stock, J. H., & Watson, M. W. (2003) · Journal of Economic Literature · doi:10.1257/002205103322436197 · Cited by 1,076
Costly capital reallocation and the effects of government spending
Ramey, V. A., & Shapiro, M. D. (1998) · Carnegie-Rochester Conference Series on Public Policy · doi:10.1016/s0167-2231(98)00020-7 · Cited by 1,061
Large Changes in Fiscal Policy: Taxes versus Spending
Alesina, A., & Ardagna, S. (2010) · Tax Policy and the Economy · doi:10.1086/649828 · Cited by 864
Forecasting Output and Inflation: The Role of Asset Prices
Stock, J. H., & Watson, M. W. (2003) · Journal of Economic Literature · doi:10.1257/jel.41.3.788 · Cited by 862
Cited by
The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States
Mertens, K., & Ravn, M. O. (2013) · American Economic Review · doi:10.1257/aer.103.4.1212 · Cited by 1,019
Fiscal Volatility Shocks and Economic Activity
Fernández-Villaverde, J., Guerrón-Quintana, P., Kuester, K., & Rubio-Ramírez, J. (2015) · American Economic Review · doi:10.1257/aer.20121236 · Cited by 938
Beyond GDP? Welfare across Countries and Time
Jones, C. I., & Klenow, P. J. (2016) · American Economic Review · doi:10.1257/aer.20110236 · Cited by 544
Output Spillovers from Fiscal Policy
Auerbach, A. J., & Gorodnichenko, Y. (2013) · American Economic Review · doi:10.1257/aer.103.3.141 · Cited by 384
Estimating Local Fiscal Multipliers
Suárez Serrato, J. C., & Wingender, P. (2016) · doi:10.3386/w22425 · Cited by 270
Metadata
- Authors
- Barro, R. J., & Redlick, C. J.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2011-02
- Volume
- 126
- Issue
- 1
- Pages
- 51-102
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2135359744
- Cited by
- 837
- References
- 23
- FWCI
- 155.37
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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