A fresh look at fiscal multipliers: one size fits it all? Evidence from the Mediterranean area
Résumé
Following the adoption of important fiscal stimuli to fight the recent crisis,
a large literature estimated fiscal multipliers. Focusing on an area particu-
larly appealing, given its diversity and the diversity of the response of
countries that compose it to the current crisis, namely the Mediterranean
area, we unveil major disparities regarding the significance, sign and size
of fiscal multipliers depending mainly on the economic characteristics, the
type of multiplier, the time span and the type of fiscal stimulus. Evidence
of such important heterogeneities highlights the need for better coopera-
tion among countries, particularly regarding the design of fiscal policy.
Failing to do so might divert public resources to ineffective fiscal policies
in some countries, or, on the contrary, deprive other countries of poten-
tially high benefits of appropriate fiscal policies, including a reliable tool
for exiting the current crisis.