CFCM Seminar: Celine Poilly (AMSE, Aix-Marseille University)

This is an in-person event

Title:  Fiscal multipliers during disasters (with Dallal Bendjellal and Andreas Dibias)

Abstract: We examine the effect of natural disasters on the size of the local public spending multiplier in U.S state economies. Using state-level military spending and disaster damages, we show that the local multiplier is significantly larger for states experiencing a natural disaster. We develop a natural disaster framework to interpret our estimates. We show that a rise in public expenditures during a disaster shock induces a larger output expansion because of a lower crowding-out of private investment. This effect is magnified by complementarity between capital and labor.

Host: Rahul Mukherjee