Bank of Spain researchers find fiscal multiplier far greater in turbulent times
The fiscal multiplier for an economy in recession or during a period of banking stress could be more than twice the size of the fiscal multiplier under ‘tranquil' economic conditions – but under weak public finances, the multiplier is much lower or even negative, according to a new paper published by the Bank of Spain.
The paper, Fiscal multipliers in turbulent times: the case of Spain, by Pablo Hernández de Cos and Enrique Moral-Benito, complains that "the bulk of the literature estimating
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