No. 1512 - New evidence on state-dependent fiscal multipliers

Temi di discussione (Working papers)
by Fabrizio Renzi
December 2025
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This paper examines how fiscal multipliers vary over the business cycle, using an econometric approach based on a continuous variable that interacts with fiscal shocks. This method overcomes the limitations of two-regime models and allows for a more precise assessment of the impact of fiscal stimuli across the full spectrum of macroeconomic conditions, from deep recessions to strong expansions, providing a more nuanced evaluation of their effects.

The results show that the public spending multiplier varies significantly over the business cycle, ranging from values close to zero during expansionary phases to slightly below one when the economy is operating below potential.

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  1. 22 December 2025
    No. 1512 - New evidence on state-dependent fiscal multipliers
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