01890cas a2200253 a 4500 AALejournalIMF016589 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498389808 1018-5941 BD-DhAAL BD-DhAAL Kitsios, Emmanouil. Estimating Fiscal Multipliers with Correlated Heterogeneity / Emmanouil Kitsios, Manasa Patnam. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (51 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We estimate the average fiscal multiplier, allowing multipliers to be heterogeneous across countries or over time and correlated with the size of government spending. We demonstrate that this form of nonseparable unobserved heterogeneity is empirically relevant and address it by estimating a correlated random coefficient model. Using a panel dataset of 127 countries over the period 1994-2011, we show that not accounting for omitted heterogeneity produces a significant downward bias in conventional multiplier estimates. We rely on both crosssectional and time-series variation in spending shocks, exploiting the differential effects of oil price shocks on fuel subsidies, to identify the average government spending multiplier. Our estimates of the average multiplier range between 1.4 and 1.6. Mode of access: Internet Patnam, Manasa. IMF Working Papers; Working Paper ; No. 2016/013 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/013/001.2016.issue-013-en.xml IMF e-Library