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Sébastien Charles
''Fiscal multipliers and policies in France and Italy: What has happened in the decade after the Great Recession?''
( 2022, Vol. 42 No.3 )
This note has a twofold ambition. First, it empirically evaluates public spending multipliers for France and Italy, over the period 1986–2018, using an embryonic Keynesian model and a methodology based on cointegration with structural break. The estimates report that multipliers are above unity and statistically significant for both countries, which validates the necessity of a massive expansion in government spending during hard times. Second, it shows that during and after the Great Recession these countries never implemented a truly expansionary fiscal policy in order to reach full employment output or, at the very least, the level of output that would have prevailed without the crisis.
Keywords: Government spending multiplier, fiscal policy
JEL: C2 - Single Equation Models; Single Variables: General
E1 - General Aggregative Models: General
Manuscript Received : Mar 16 2022 Manuscript Accepted : Sep 30 2022

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