Suchergebnisse

Using a novel rich dataset at the regional level, this paper provides new empirical evidence on the €fiscal transmission mechanism in the Eurozone. Our baseline estimates reveal a government spending relative output multiplier of 2.9, an employment multiplier of 1.9, and a cost per job created of €24,000. Moreover, we €find that a regional €fiscal stimulus leads to a signi€ficant increase in private investment, productivity, durable consumption, and real wages together with a signi€ficant rise in total hours worked driven by changes in the extensive margin (total employment), whereas the intensive margin (hours per worker) barely reacts. We estimate only small regional €fiscal spillovers but detect notable state dependencies. Regional fi€scal multipliers are larger in economic recessions, during €fiscal consolidations, and in the core countries of the Eurozone.

Foreign measures of uncertainty, such as the US EPU index, are often used as a proxies for domestic uncertainty in small open economies. We construct an EPU index for Sweden and demonstrate that shocks to the domestic index yield different impulse response functions for GDP growth than shocks to the US index. In particular, a one standard deviation shock to the Swedish index delivers its maximum impact in the same quarter, lowering GDP growth by 0.2 percentage points. In contrast, a shock to the US index delivers its maximum impact with a one-quarter delay. Other foreign proxies, such as the EU and German indices, also generate effects that peak with a one-quarter delay.