What's the Fiscal Multiplier For?

Interview with Prof. Rolf Campos


Is it possible to determine the impact of an increase or reduction in public spending on the economic activity of a country? This is precisely what the fiscal multiplier does, measuring the effect of changes in public spending on the GDP. As IESE Prof. Rolf Campos explains in this interview, a drop in public spending during times of recession can reduce economic activity more than expected.