Data and Code for: State Dependent Government Spending Multipliers: Downward Nominal Wage Rigidity and Sources of Business Cycle Fluctuations

Principal Investigator(s): View help for Principal Investigator(s) Yoon Joo Jo, Texas A&M University; Sarah Zubairy, Texas A&M University

Version: View help for Version V1

Name	File Type	Size	Last Modified
Figure5.do	text/plain	3 KB	04/20/2024 11:02:AM
Section5.do	text/plain	53.8 KB	04/20/2024 11:02:AM
Section6.do	text/plain	23.3 KB	04/20/2024 11:02:AM
TableA12.do	text/plain	10 KB	04/20/2024 11:02:AM

Project Description

Summary: In a New Keynesian model with downward nominal wage rigidity (DNWR), we show that government spending is more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large when DNWR binds, but the nature of recession matters due to the opposing response of inflation, and consequently for real wages. Using U.S. historical time series data, we provide evidence of larger spending multipliers in low inflation recessions and the importance of the depth of recessions. We also employ cross-sectional data from U.S. states to document supporting evidence on multipliers and our proposed mechanism.

Scope of Project

Subject Terms: Government Spending Multipliers; Source of Fluctuation; Regional multipliers; Downward Nominal Wage Rigidity

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      E62 Fiscal Policy

Geographic Coverage: United States, US States

Universe: United States
US States

Data Type(s): aggregate data; program source code

Related Publications

Download this project

Published Versions

V1 [2024-12-20]

Export Metadata

Dublin Core

DDI 2.5

Report a Problem

Found a serious problem with the data, such as disclosure risk or copyrighted content? Let us know.

This material is distributed exactly as it arrived from the data depositor. ICPSR has not checked or processed this material. Users should consult the investigator(s) if further information is desired.