Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/316175 
Year of Publication: 
2025
Series/Report no.: 
LEM Working Paper Series No. 2025/10
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
The paper examines the macroeconomic effects of fiscal policy under varying economic conditions. The analysis is conducted using a closed-economy agent-based model, where macroeconomic outcomes of fiscal intervention emerge from the bottom up as the result of interactions between heterogeneous agents in different markets, with feedback loops between demand, supply, and the financial sector. The model simulation results indicate that expansionary fiscal policies generate significant positive effects on aggregate output, with a public consumption multiplier of 1.6 on average, and an income tax multiplier of approximately 1.0. Notably, the effectiveness of a public direct consumption stimulus exhibits significant non-linearities, with multipliers reaching up to 3.5 during periods of economic slack and 2.5 during times of high financial fragility. In contrast, income tax rate multiplier appears largely acyclical. Overall, this analysis contributes to the growing and unsettled debate on the state-dependent effects of fiscal policy, providing model-based insights into this crucial topic.
Subjects: 
Fiscal policy
State-dependent fiscal multipliers
Agent-based models
Non-linear dynamics
JEL: 
C63
E62
H30
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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