A fresh look at fiscal multipliers: one size fits it all? Evidence from the Mediterranean area

Résumé 0

Following the adoption of important fiscal stimuli to fight the recent crisis,a large literature estimated fiscal multipliers. Focusing on an area particu-larly appealing, given its diversity and the diversity of the response ofcountries that compose it to the current crisis, namely the Mediterraneanarea, we unveil major disparities regarding the significance, sign and sizeof fiscal multipliers depending mainly on the economic characteristics, thetype of multiplier, the time span and the type of fiscal stimulus. Evidenceof such important heterogeneities highlights the need for better coopera-tion among countries, particularly regarding the design of fiscal policy.Failing to do so might divert public resources to ineffective fiscal policiesin some countries, or, on the contrary, deprive other countries of poten-tially high benefits of appropriate fiscal policies, including a reliable toolfor exiting the current crisis.