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Major aim of the paper is to explain how Keynesian multiplier model can be used to estimate the effect of expenditure changes on regional economy especially regional income and employment. Among many factors, marginal propensity to consume locally produced goods plays a crucial role in determining regional multiplier effects. A critical feature of the regional multiplier is an extent to which expenditure injections leak out of a region and special attention has therefore been paid to identifying the nature of this leakage. Regional multiplier analysis has undoubtedly proved to be of a substantial value not only for defining and operating regional policy but also in providing an explanation of how regional economies actually function. It nevertheless has its weaknesses, the primary one being that it does not provide detailed information of economic effects of the expenditure injections. As a response to this criticism, regional econometric models which provide far greater details have been developed.

Transfers to individuals were a larger part of the 2009 U.S. stimulus package than government purchases. Using a two-agent New Keynesian model, this paper shows analytically that the multiplier on targeted transfers to financially constrained households is (i) larger than the purchase multiplier if the zero lower bound (ZLB) binds, and (ii) is more sensitive to the degree of monetary accommodation of inflation. Targeted transfers provide the same boost to demand as purchases, but lower aggregate supply relative to purchases, as those receiving transfers want to work less. When the aggregate demand curve inverts, such as when the zero lower bound binds, the extra inflation from lower supply boosts the multiplier. This result also holds quantitatively in a medium-scale version of the model.

We investigate the effectiveness of `Keynesian' fiscal stimuli when government deficits and debt rollovers are (possibly partially) financed by balance sheet constrained financial intermediaries. Because financial intermediaries operate under a leverage constraint, deficit financing of fiscal stimulus packages will cause interest rates to rise as private loans are crowded out by government debt in the credit provision channel. This lowers investment and (future) capital stocks, which affects output negatively for a prolonged period. Anticipations of these future consequences cause the price of capital and bonds to drop immediately when the policy is announced, inflicting capital losses on banks which leads to further tightening of leverage constraints and credit market conditions. This balance sheet effect triggers a negative amplification cycle further lowe ring the fiscal multiplier. Longer maturity debt leads to larger capital losses and lower Keynesian multipliers. When in addition sovereign default risk is introduced, additional capital losses may occur and outcomes deteriorate further after a deficit financed stimulus package, eventually implying a cumulative Keynesian multiplier close to zero or even negative. We do not argue that multipliers are always negative; but financial fragility and sovereign risk problems may severely lower them, possibly to the point of becoming negative.

In this paper we use the panel VAR model with exogenous variables to analyse the effects of various structural characteristics of the economies on the effectiveness of government consumption in the Central Eastern and Southeastern European region (CESEE). More precisely, we analyse the effects of government consumption on economic growth in this region, controlling for the effects of the size of the economy, level of public debt, level of tax burden, openness of the economy, rigidity of the labour market, monetary regime and the phase of the business cycle. Our results indicate that these characteristics have a significant impact on the effectiveness of fiscal policy (in terms of the size of the fiscal multiplier). Also, these effects are in line with the theoretical assumptions as the recessionary phase of the cycle, size of the economy, rigidity of the labour market and the fixed exchange rate regime increase the average size of fiscal multipliers while tax burden, indebtedness and openness of the economies reduce the size of the fiscal multiplier, when compared to the base model.

The aim of this paper is to estimate government consumption multiplier and to examine the effect of various characteristics of countries on the size of fiscal multiplier. We apply a panel VAR model following Ilzetzki et al. (2013) for a sample of 28 EU countries covering the period from 1995 to 2017. Key findings are, first, the estimated average fiscal multiplier is larger than unity. Second, the size of fiscal multiplier is larger in the cases of lower public indebtedness, for more developed European countries and for more financially open economies, which is also in line with relevant empirical literature. Regarding the role of trade openness, the results are inconclusive. In addition to this, membership of countries in the European integrations positively affects the size of fiscal multiplier. Therefore, fiscal policymakers should use fiscal stimuli as the instrument of boosting short-term economic growth selectively and consider country-specific characteristics. This paper contributes to the ongoing discussion in two ways, it examines the effect of additional characteristics of countries on the size of fiscal multiplier and updates existing empirical literature.

JEL - Codes: C32, C51, E62 ; Since the monetarist-Keynesian scal policy debate of the late 1960 s, researchers have faced an endless discussion about the role that this policy should play in the economy. Recent evidence points to a heterogeneous scal multiplier rather than a homogeneous one, that is, a country-speci c and state-dependent multiplier. Moreover, a series of recent papers defend that the scal multiplier is higher in recessionary periods when compared to normal times . Previously used models, such as DSGE or VAR, are not capable of capturing the kind of dynamics that we observe in the implemen- tation of modern scal policy. This thesis aims to analyse and model nonlin- earities for the Portuguese scal multiplier. Results suggest that symmetric government spending shocks have asymmetric e¤ects on real GDP depend- ing on the business cycle position, sign and the magnitude of the shock. In order to pursue this analysis, a Logistic STVAR model was applied to the Portuguese data and the transition dynamics were reported with Generalized Impulse Response Functions. ; Desde o debate monetaristas-Keynesianos no nal dos anos 60 sobre política orçamental, os investigadores têm enfrentado uma discussão inter- minável sobre o papel que esta política deve desenvolver na economia. Re- centes evidências direcionam para um multiplicador orçamental heterogéneo, em vez de um homogéneo, ou seja, um multiplicador que seja especí co ao país e dependente do regime económico. Além disso, um grupo de recentes artigos defendem que o multiplicador orçamental é maior em "períodos de recessão" quando comparado com "períodos normais". Modelos utilizados antigamente, tais como modelos DSGE ou VAR, não estão construídos para capturar as dinâmicas que observamos na implementação da política scal moderna. Assim, esta tese tem por nalidade analisar a existência de não- linearidades no multiplicador orçamental português. Os resultados obtidos sugerem que um choque simétrico nas despesas orçamentais do governo tem efeitos assimétricos no PIB real dependentes da posição do ciclo económico, sinal e magnitude do choque. De modo a prosseguir esta análise, foi apli- cado um modelo Logístico STVAR a uma base de dados portuguesa e as transições dinâmicas foram reportadas com Funções de Impulso Resposta Generalizadas.