La crisi e i moltiplicatori fiscali.(The crisis and fiscal multipliers)

Abstract

The expansionary fiscal contraction thesis, that implies negative values for the fiscal multipliers, is criticised both from a theoretical and an empirical point of view. The most recent researches find multipliers of rather high positive values, in contrast with the rather low ones of the DSGE models and of the previous IMF empirical estimates. Especially in downturns and when interest rates are already near zero, the expenditure multipliers, in particular those of investments and those of the transfers targeted to low income households, are significantly larger than the tax multipliers. Hence, expenditure reductions have greater recessionary effects than tax increases, contrary to what is thought in many quarters of both the EU and the ECB. Thus , in order not to depress too much the prospects of growth or not to worsen the recessionary conditions, it seems that the process of fiscal consolidation should be slowed down. Also, to foster the recovery without worsening the budget deficits, it seems useful: a) to increase the expenditure for investments and for targeted transfers and to scale down those for general transfers; b) to reduce the taxes on labour income and to increase those on the high levels of income and property.