PRIVATE DEBT OVERHANG AND THE GOVERNMENT SPENDING MULTIPLIER: EVIDENCE FOR THE UNITED STATES

Research, Preprint, Article OPEN
Marco Bernardini; Gert Peersman;
(2015)
  • Publisher: Center for Economic Studies and Ifo Institute (CESifo) Munich
  • Journal: issn: 0883-7252
  • Publisher copyright policies & self-archiving
  • Related identifiers: doi: 10.1002/jae.2618
  • Subject: E62 | C32 | government spending multipliers | E32 | N12 | private debt | drivers | government spending multipliers, drivers, private debt
    • jel: jel:E32 | jel:C32 | jel:E62 | jel:N12
      ddc: ddc:330

Using state-dependent local projection methods and historical U.S. data, we find that government spending multipliers are considerably larger in periods of private debt overhang. In particular, we find significant crowding-out of personal consumption and investment in l... View more
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