Heterogeneous Spending, Heterogeneous Multipliers

Heterogeneous Spending, Heterogeneous Multipliers
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Volume/Issue: Volume 2023 Issue 052
Publication date: March 2023
ISBN: 9798400233777
$20.00
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Labor , Economics- Macroeconomics , Public Finance , Economics / General , Heterogeneous Local Fiscal Multipliers , Services and Goods Spending , Labor Intensity , government purchase , heterogeneous multiplier , copyright page , goods spending , services spending , Fiscal multipliers , Employment , Defense spending

Summary

Do local fiscal multipliers depend on what the government purchases? We find that government purchases of services have larger effects on employment than spending on goods. Industries producing services are more labor-intensive than industries producing goods. This heterogeneity in labor intensity is an important mechanism behind these results. Spending directed toward labor-intensive industries generates stronger increases in employment and labor income relative to spending toward non-labor-intensive industries.