Inside the IMF Òmea culpaÓ: A panel analysis on growth forecast errors and Keynesian multipliers in Europe

Emiliano Brancaccio and Fabiana De Cristofaro ()
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Fabiana De Cristofaro: Scuola Superiore SantÕAnna Italy

PSL Quarterly Review, 2020, vol. 73, issue 294, 225-239

Abstract: The tests carried out by Blanchard and Leigh (2013; IMF, 2012) and F‡tas and Summers (2018) are extended here into a panel framework in order to assess the empirical basis of the so-called IMF Òmea culpaÓ regarding the underestimation of Keynesian multipliers during the euro area crisis. The objections put forward by the European Central Bank, the European Commission and other authors against the ÒunderestimationÓ thesis are tested and refuted. The results support the Òmea culpaÓ and highlight that the underestimation of multipliers can concern both the short and the long term.

Keywords: GDP forecast errors; Keynesian multipliers; panel analysis (search for similar items in EconPapers)
JEL-codes: E23 E27 E62 (search for similar items in EconPapers)
Date: 2020
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