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Article Dans Une Revue American Economic Journal: Macroeconomics Année : 2013

A Pitfall with Estimated DSGE-Based Government-Spending Multipliers

Patrick Fève
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Julien Matheron
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Jean-Guillaume Sahuc
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Résumé

This paper examines issues related to the estimation of the government spending multiplier (GSM) in a DSGE context. We stress a source of bias in the GSM arising from the combination of endogenous government expenditures and Edgeworth complementarity between private consumption and government expenditures. Due to cross-equation restrictions, omitting the endogenous component of government policy at the estimation stage would lead an econometrician to underestimate the degree of Edgeworth complementarity and, consequently, the long-run GSM. An estimated version of our model with US postwar data shows that this bias matters quantitatively. The results are robust to a number of perturbations.

Dates et versions

hal-01612704 , version 1 (07-10-2017)

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Citer

Patrick Fève, Julien Matheron, Jean-Guillaume Sahuc. A Pitfall with Estimated DSGE-Based Government-Spending Multipliers. American Economic Journal: Macroeconomics, 2013, 5 (4), pp.141-178. ⟨10.1257/mac.5.4.141⟩. ⟨hal-01612704⟩
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