This paper argues that an important, yet overlooked, determinant of the government spending multiplier is the direction of the fiscal intervention. Regardless of whether we identify government spending shocks from (i) a narrative approach, or (ii) a timing restriction, we find that the contractionary multiplier —the multiplier associated with a negative shock to government spending— is above 1 and largest in times of economic slack. In contrast, the expansionary multiplier —the multiplier associated with a positive shock— is substantially below 1 regardless of the state of the cycle. These results help understand seemingly conflicting results in the literature. A simple theoretical model with incomplete financial markets and downward nominal wage rigidities can rationalize our findings.

中文翻译：

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了解政府支出乘数的大小：它在迹象中

本文认为，政府支出乘数的一个重要但被忽视的决定因素是财政干预的方向。无论我们是从 (i) 叙事方法还是 (ii) 时间限制确定政府支出冲击，我们发现收缩乘数——与政府支出负面冲击相关的乘数——大于 1，并且在经济疲软。相比之下，无论周期状态如何，扩张乘数——与正冲击相关的乘数——都大大低于 1。这些结果有助于理解文献中看似矛盾的结果。一个具有不完整金融市场和向下的名义工资刚性的简单理论模型可以使我们的研究结果合理化。