Local Government Spending Multipliers and Financial Distress: Evidence from Japanese Prefectures

Markus Brückner*, Anita Tuladhar

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

39 Citations (Scopus)

Abstract

We estimate local government spending multipliers using annual data for 47 Japanese prefectures during the 1990s. Our main findings are as follows: the average local government spending multiplier is positive and significantly different from zero but not larger than one; there are large and significant differences in the output effects of different types of government expenditures: transfers to firms have the highest multiplier, significantly larger than one, while transfers to households have the lowest multiplier, significantly below zero; firms' financial distress has a significant negative effect on the local government spending multiplier, in contrast to economic slack that has a significant positive effect.

Original languageEnglish
Pages (from-to)1279-1316
Number of pages38
JournalEconomic Journal
Volume124
Issue number581
DOIs
Publication statusPublished - 1 Dec 2014
Externally publishedYes

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