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Submitted by Ugochukwu Agu on
The most recent study I did (though unpublished) for most developing countries in African and few countries from the advanced economies equally reaffirmed IIzeski and Vegh (2009) smaller fiscal multipliers values for advanced countries and larger values for developing economies. For instance Argentina and South Africa had impact employment multipliers of 0.6 and 0.3 respectively, and their long run multipliers were twice that of any of the developed countries. This goes to show that an additional 1% shock to government consumption in Argentina will lead to an increase in employment by 0.6% in the short-run and would lead to an increase in employment by 1.9% in the long-run (peak). Employment multipliers for Italy are 0.09 in the short term and 0.11 in the long term. That means that a 5% increase in government consumption (or €16bn in 2009; 1% of GDP) can lead to a 0.45% increase in employment (or 100,000 more people) in the short-run and to a 0.55% (125,000 more people) increase in employment in the long-run. The potential short-term impact is higher than it would be in France, Germany and United Kingdom