What is this paper about?
This paper looks at Ireland’s fiscal multipliers using a new dataset on government spending shocks from 1987 to 2019. The paper tries to remove the effect of policy changes being anticipated and the effects of the business cycle using the so-called “narrative approach”.
This involves following the approach of Romer and Romer (2010), Cloyne (2013), and others by carefully classifying historical spending shocks.
What does the paper find?
Using several approaches, the paper finds that public spending shocks in Ireland have had limited statistically significant impacts on output.
We provide the dataset on spending shocks identified as an accompaniment to this paper. These data are available on our datasets page.
The opinions expressed and arguments employed in this paper do not necessarily reflect the official views of the Fiscal Council.