Replication data for: A Pitfall with Estimated DSGE-Based Government Spending Multipliers
- Fève, Patrick
- Matheron, Julien
- Sahuc, Jean-Guillaume
AbstractThis 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.
Is supplement to
DOI: 10.1257/mac.5.4.141 (Text)
Fève, Patrick, Julien Matheron, and Jean-Guillaume Sahuc. “A Pitfall with Estimated DSGE-Based Government Spending Multipliers.” American Economic Journal: Macroeconomics 5, no. 4 (October 2013): 141–78. https://doi.org/10.1257/mac.5.4.141.
- ID: 10.1257/mac.5.4.141 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-10-13