Fiscal Multipliers for the United States

Anna Sznajderska

doi:https://doi.org/10.59139/ps.2025.01.2

Anna Sznajderska SGH Warsaw School of Economics, Collegium of Economic Analysis, Institute of Econometrics, Financial Markets Modelling Unit, ul. Madalińskiego 6/8, 02-513 Warszawa, Poland ORCID:https://orcid.org/0000-0002-5604-1229 Przegląd Statystyczny. Statistical Review, vol. 72, 2025, 1, pages: 18-31 Published online: 15 October 2025 DOI https://doi.org/10.59139/ps.2025.01.2 Citation: Sznajderska, A. (2025). Fiscal Multipliers for the United States. Przegląd Statystyczny. Statistical Review, 72(1), 18–31. https://doi.org/10.59139/ps.2025.01.2.

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ABSTRACT

The aim of this study is to trace the effects of fiscal policy shocks. We calculate the level of fiscal multipliers and short-term output fiscal elasticities for the United States. We do so by estimating a Bayesian three-variate fiscal vector autoregression model that accounts for uncertain identification assumptions. The government spending multiplier is equal to 1.65 on impact and 0.53 after one year, while the tax multiplier is equal to -2.00 on impact and -0.10 after one year. The posterior output elasticity of taxes is equal to 2.20. Increasing the prior assumptions for output elasticity of taxes leads to a lower tax multiplier. The study shows that both increasing spending and decreasing taxes can stimulate the economy. However, the effects of tax decreases may be larger for the economy.

KEYWORDS

fiscal multipliers, Bayesian VAR model, short-term elasticities, output elasticity of taxes

JEL

C11, C32, E62, E63, H50

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