Skip to content
Browse All Resources
Working Papers

MAR 9, 2023

Heterogeneous Spending, Heterogeneous Multipliers

Abstract

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 income and consumption relative to spending toward non-labor-intensive industries.

Related

Your Direct Line to Cutting-Edge Research

Get updates on our latest research, event announcements, and policy insights delivered straight to your inbox. Stay connected with the leading voices on equitable growth.