Home > Fiscal Policy, UK GDP > What’s the Fiscal Multiplier, UK Edition

What’s the Fiscal Multiplier, UK Edition

The IMF have apparently converted to the Keynesian view.

Having found no inspiration from trying to think about how deficits could determine the level of nominal GDP, I took at look at the UK government spending data.  This table shows the percentage growth over four quarters in the levels of nominal GDP, nominal government final consumption spending, and nominal government gross capital formation:

Four
quarters
to
Government
Final
Consumption
Government
Gross Capital
Formation
Nominal
GDP
2009 Q2 2.8 14.2 -4.6
2010 Q2 3.4 1.0 5.5
2011 Q2 -0.3 -7.7 3.7
2012 Q2 4.9 -0.9 2.1

So… what’s the fiscal multiplier?  I’d suggest these series are not strongly correlated.

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Categories: Fiscal Policy, UK GDP
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