Government Spending Multipliers Estimates Are Not of Any Use to Policy Makers

More and more papers are being writing about empirical estimates of government spending multipliers.

So with this increase the question also arise if policy makers should use these estimates while making new policy. My opinion is that they should not. First, I explain my thesis by arguing that for every kind of government spending there is a different multiplier. Second, I will explain why the results of the papers are difficult to use because they are not accurate.

Mostly military spending could have an different effect on the economy than social spending like health care or unemployment benefits. For example when the government spend more on new tanks.

More steel going into tanks and less available to build a factory, etc. The price goes up and also labor gets more expensive. But when the government increases unemployment benefits. The unemployment households could save this money and not buy new stuff, which wil not result in price effects. In the Valerie Ramey interview has with EconTalk he said that an increase in military spending could discourage private consumption and investment. But in mine point of households save extra and because in the I=S

investment would increase. So what I am trying to say is that the multiplier for military spending is different from other government spending.

There is also between the empirical papers huge differences in estimates, Like in the interview Valerie Ramey said ‘’Right. Some find it as high as 3 point something--that's the one we just talked about. And some are as low as 0.5’’. So if the policy maker’s ideology is that government should spend less. He will present his policy with the papers that found low multipliers. Policy makers will use the papers who fits best there ideology. And because the estimates have a wide range, they can. So it is hard to say if it is for them any use, because