A St. Louis Fed working paper examines whether government spending multipliers are greater during periods of high unemployment. “We find no evidence that multipliers are greater during periods of high unemployment in the U.S. We do find some evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.”

Category: Think Tank

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One Response to “Are Government Spending Multipliers Greater During Periodsof Slack? Evidence from 20th Century Historical Data”

  1. DeDude says:

    Others have found the answer to be yes. The answer for Canada is yes – but for US it’s No?????

    Simple logic strategies (like weathermen looking out the window), would suggest that when the price of labor and materials is lower and government have to pay those folks unemployment benefits anyway, that would have to increase the multiplier compared to boom times.

    This one calls for a common sense override. Something is fishy, but I don’t have time to fish it out.