Francesco Franco dá mais uma achega à polémica entre FMI e Comissão Europeia. Um post que vale a pena ler, no The Portuguese Economy: The war of the multipliers.
Reason 1. says that the fiscal multipliers may be underestimated, but this is due to countries that have adopted a stimulative fiscal stance (I would add: good for them!). Furthermore these stimuli are temporary in nature and imply higher multipliers than those due to permanent fiscal consolidations (…)Reason 2 is harder. In the EC study, adding as an explanatory variable the change in government yields, the underestimation result disappears. The explanation is as follows: “…the negative coefficient for the fiscal stance in the first regression should not be interpreted as an underestimation of the fiscal multiplier but rather as capturing a negative response of investors to possibly insufficient fiscal effort in countries with severe debt problems.” I would argue that the case for reverse causality is strong: were the yields reflecting the preoccupation of the markets for a not strong enough fiscal consolidation or for a not strong enough economic growth? In the latter case the regression suffers from an endogeneity problem (see IMF footnote 3) and the coefficients estimates would be biased.