Fiscal Multiplier
Also called: multiplier effect, spending multiplier
The fiscal multiplier is how much GDP changes per unit of government spending or tax change, once the money recirculates through the economy. Its size is the central empirical dispute in fiscal policy: estimates below one imply stimulus partly displaces private activity, above one that it more than pays for itself in output. The consensus is that multipliers are larger in recessions and at the zero lower bound, and smaller at full employment.
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