Fiscal Multiplier - Various Types of Fiscal Multipliers

Various Types of Fiscal Multipliers

The following values are theoretical values based on simplified models, and the empirical values corresponding to the reality have been found to be lower (see below).

Note: In the following examples the multiplier is the right-hand-side equation without the first component.

  • y is original output (GDP)
  • is marginal propensity to consume (MPC)
  • is original income tax rate
  • is marginal propensity to import
  • is change in income (equivalent to GDP)
  • is change in lump-sum tax rate
  • is change in income tax rate
  • is change in government spending
  • is change in aggregate taxes
  • is change in investment
  • is change in exports

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