Ramey on Stimulus and Multipliers

Valerie Ramey talks with host Russ Roberts about the effect of government spending on output and employment. Ramey's work exploits the exogenous nature of wartime spending. She finds a multiplier between .8 and 1.2. She also discusses a survey looking at estimates by others and discusses the effects of taxes. The conversation concludes with a discussion of the imprecision of multiplier estimates and the contributions of recent Nobel Laureates Sargent and Sims.