The Young, the Old, and the Government: Demographics and Fiscal Multipliers

We document that government spending multipliers depend on the population age structure. Using the variation in military spending and birth rates across US states, we show that the local fiscal multiplier is 1.5 and increases with the population share of young people, implying multipliers of 1.1–1.9...

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Veröffentlicht in:	American economic journal. Macroeconomics 2021-10, Vol.13 (4), p.110-141
Hauptverfasser:	Basso, Henrique S., Rachedi, Omar
Format:	Artikel
Sprache:	eng
Schlagworte:	1980-2015 Altersstruktur Kreditmarkt Militärausgaben Neoklassische Synthese Regionaler Arbeitsmarkt Regionaler Multiplikator Unvollkommener Markt USA
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creator	Basso, Henrique S. Rachedi, Omar
description	We document that government spending multipliers depend on the population age structure. Using the variation in military spending and birth rates across US states, we show that the local fiscal multiplier is 1.5 and increases with the population share of young people, implying multipliers of 1.1–1.9 in the interquartile range. A parsimonious life cycle open economy New Keynesian model with credit market imperfections and age-specific differences in labor supply and demand explains 87 percent of the relationship between local multipliers and demographics. The model implies that the US population aging between 1980 and 2015 caused a 38 percent drop in national government spending multipliers.
doi_str_mv	10.1257/mac.20190174
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subjects	1980-2015 Altersstruktur Kreditmarkt Militärausgaben Neoklassische Synthese Regionaler Arbeitsmarkt Regionaler Multiplikator Unvollkommener Markt USA
title	The Young, the Old, and the Government: Demographics and Fiscal Multipliers
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