Management Sciences and Quantitative Methods Commons^™

By Habits Or Choice? Discretionary Spending In The Oecd, Riccardo Fiorito

riccardo fiorito

Only 1/3 of Government spending in the Oecd countries results from choice rather than from inertia. This result stems from Coricelli-Fiorito (21013) where a measure of discretion is provided. A major implication is that most multiplier analysis of public spending is unreliable since it typically refers to variables often reflecting past habits or business cycle implications instead of occasional and intentional policy controls.