[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-113435-en":3,"doc-seo-113435-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},113435,1374391974468,"Eden","https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0",8,"Research & Report","Cross-Region Transfer Multipliers in a Monetary Union - Evidence from Social Security and Stimulus Payments","US federal transfers to individuals are large, countercyclical, and geographically varying, often credited with stabilizing regional economies. The paper estimates short-run effects using plausibly exogenous regional variation from temporary stimulus payments and permanent Social Security benefit increases. States receiving larger transfers grew faster contemporaneously, with a multiplier around 1.5 for permanent transfers and about 1/3 for temporary transfers, consistent with an open-economy New Keynesian framework. At business-cycle frequencies, cross-region multipliers remain modest, implying limited stabilization from automatic federal stabilizers.","Pub lic Disclosure Authorized Pub lic Disclosure Authorized  \nAmerican Economic Review 2021, 111(5): 1689–1719  \n[https://doi.org/10.1257/aer.20190240](https://doi.org/10.1257/aer.20190240)  \nCross-Region Transfer Multipliers in a Monetary Union: Evidence from Social Security and Stimulus Payments†  \nBy Steven Pennings*  \nUS federal transfers to individuals are large, countercyclical, vary geographically, and are often credited with helping to stabilize regional economies. This paper estimates the short-run effects of these transfers using plausibly exogenous regional variation in temporary stimulus payments and permanent Social Security benefit increases. States that received larger transfers tended to grow faster contemporaneously, with a multiplier of around 1.5 for permanent transfers and 1/3 for temporary transfers. Results are broadly consistent with an open-economy New Keynesian model. At business cycle frequencies, cross-region transfer multipliers are not large, suggesting only modest gains in regional stabilization from US federal automatic stabilizers. (JEL E12, E32, E62, H23, H55, R12)  \nUS federal expenditure increasingly involves making transfers to individuals rather than purchasing (or producing) output. In 2017, US federal transfers to individuals were around $1.4–$2.1 trillion (depending on the definition used), which is larger than government consumption. Transfers to individuals were the cornerstone of fiscal stimulus packages in 2001 and 2008 and accounted for the majority of the increase in expenditure around the 2007–2009 financial crisis in the United States and other countries (Oh and Reis 2012) . More recently, transfers to households are a major part of the economic response to COVID-19 in more than two dozen countries, with the US federal government spending around $250 billion on one-off payments in 2020:II (IMF 2020). In developing countries, conditional and unconditional cash transfers are increasingly popular antipoverty programs, reaching around 500 million beneficiaries (World Bank 2018) .  \nFederal transfer policies naturally redistribute income across regions, with benefits often tilted to low-income areas or to regions receiving negative shocks. Automatic stabilizers mean individuals in regions entering recessions receive more federal benefits and pay lower federal taxes. A number of papers have found that  \n* World Bank (email: [spennings@worldbank.org](spennings@worldbank.org)). Emi Nakamura was the coeditor for this article. For helpful comments, I thank several anonymous referees, Virgiliu Midrigan, Mark Gertler, Bill Easterly, Aart Kraay, Emmanuel Farhi, Glenn Follette, Hyun Oh, Pierre Bachas, Jenny Guardado, Arthur Mendes, Roberto Fattal, Thuy Lan Nguyen, Antonn Park, and seminar participants at NYU, the World Bank, Federal Reserve Board, the NY Fed, the Bank of England, Midwest Macro, UNSW, Monash, ANU, Georgetown, CIDE, JHU-SAIS, CESifo Venice Summer Institute, and the ECB. The views expressed here are the author’s and do not necessarily reflect those of the World Bank, its executive directors, or the countries they represent.  \n†Go to [https://doi.org/10.1257/aer.20190240](https://doi.org/10.1257/aer.20190240) to visit the article page for additional materials and author disclosure statement.  \n1690 THE AMERICAN ECONOMIC REVIEW MAY 2021  \nthese (and other) net federal transfers are about $0.20–$0.40 of every dollar fall in regional income in the United States, which are thought to help stabilize regional economies (Sala-i-Martin and Sachs 1991, Bayoumi and Masson 1995, Feyrer and Sacerdote 2013) . As such, The Economist writes that “Indeed, America’s fiscal union is so good at absorbing [regional] shocks that it is often cited as a model for the more accident-prone euro zone.” 1  \nDespite their importance, little is known about the effect of transfers to individuals on short-run regional economic growth, which I call the size of the cross-region transfer multiplier. My main contrib","cbCainOoUIblDL6c","https://ap.wps.com/l/cbCainOoUIblDL6c","pdf",759157,1,31,"English","en",105,"# US federal transfers and motivation\n## Size, countercyclicality, and geographic variation\n## Role in stimulus, crises, and antipoverty programs\n# Empirical strategy and identification\n## Natural experiments: Social Security and stimulus policies\n## Plausibly exogenous regional variation\n# Main findings\n## Short-run growth effects and estimated multipliers\n## Permanent versus temporary transfers\n## Consistency with open-economy New Keynesian model\n# Conceptual framework and theory\n## Relation to marginal propensity to consume (MPC)\n## Relation to cross-sectional purchase multipliers\n## Determinants: local equilibrium effects, openness, wealth effects\n# Implications for stabilization\n## Cross-region multipliers at business cycle frequencies\n## Limits of automatic stabilizers for regional stabilization","[{\"question\":\"What does the paper measure with the cross-region transfer multiplier?\",\"answer\":\"It measures the short-run effect of transfers to individuals on regional economic growth, specifically how transfer changes across US states relate to contemporaneous growth outcomes.\"},{\"question\":\"How are the paper’s transfers identified as plausibly exogenous?\",\"answer\":\"Through natural experiments where permanent Social Security benefit increases and temporary stimulus payments allocate transfers across states in ways plausibly unrelated to regional business cycles.\"},{\"question\":\"What are the estimated multipliers for permanent versus temporary transfers?\",\"answer\":\"States receiving larger permanent transfers show a multiplier around 1.5, while temporary transfers have a smaller multiplier of roughly 1/3 in the short 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does the paper measure with the cross-region transfer multiplier?","Question",{"text":74,"@type":75},"It measures the short-run effect of transfers to individuals on regional economic growth, specifically how transfer changes across US states relate to contemporaneous growth outcomes.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"How are the paper’s transfers identified as plausibly exogenous?",{"text":79,"@type":75},"Through natural experiments where permanent Social Security benefit increases and temporary stimulus payments allocate transfers across states in ways plausibly unrelated to regional business cycles.",{"name":81,"@type":72,"acceptedAnswer":82},"What are the estimated multipliers for permanent versus temporary transfers?",{"text":83,"@type":75},"States receiving larger permanent transfers show a multiplier around 1.5, while temporary transfers have a smaller multiplier of roughly 1/3 in the short 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