Abstract: Abstract Motivating with two scenarios in which the government spending in China timely reacted to output shock within a quarter, this letter points out a downward bias in the estimation of Chinese government spending multiplier using the classical lag restriction for shock identification in a quarterly SVAR framework a la Blanchard and Perotti (2002) . By relaxing the lag-length restriction from one quarter to one month, we propose a mixed-frequency identification (MFI) strategy by taking the unexpected spending change in the first month of ea...
(read more)
Topics: 
Econometrics