Home/Tools/Fiscal multiplier

Fiscal and macro analytics

Fiscal multiplier bench calculator.

Build a hypothetical fiscal package by composition, then estimate the one-year and three-year GDP impact, jobs implied, and net cost after tax revenue offset. Multipliers are state-dependent: they rise when the output gap is negative, when monetary policy is accommodative, and when the economy is closed. All math runs in your browser.

Inputs

Headline cost over the implementation window. CBO scoring convention; not a budget authority figure.
Sliders should sum to 100. The total is shown live below; rebalance if it drifts.
Infrastructure, R&D, public capital. Multiplier baseline 1.5 (Auerbach-Gorodnichenko 2012; CBO 2015).
Goods, services, federal payroll ex-defense. Multiplier baseline 0.7 (Ramey 2019 survey).
Top quintile MPC is low. Multiplier baseline 0.4 (Zidar 2019; Mertens-Olea 2018).
Bottom quintile MPC near 1. Multiplier baseline 1.2 (Zidar 2019; Parker et al. 2013).
SNAP, EITC, UI. Multiplier baseline 1.0 (CBO 2015; Romer-Romer 2010).
Procurement and operations. Multiplier baseline 0.8 (Ramey 2011 narrative; Nakamura-Steinsson 2014 cross-state).
Negative is recession or slack. CBO Q1 2026 estimate near minus 0.4. Auerbach-Gorodnichenko: multipliers in slack are roughly 2x larger than at full employment.
Accommodative scales multipliers by 1.3, neutral by 1.0, restrictive by 0.7 (Christiano-Eichenbaum-Rebelo 2011; ZLB literature).
Higher openness leaks demand abroad. US is around 15 percent (BEA 2024). Each 10-point increment scales multipliers by 0.92.

Outputs

Composite multiplier
1.30
Composition weighted, state adjusted
One-year GDP impact
$130.0B
0.46% of US GDP
Three-year cumulative GDP impact
$208.0B
Cumulative, with 0.6 decay per year
Implied jobs (peak)
1.43M
11,000 jobs per 1B GDP (CBO 2010 rule)
Tax revenue offset
$39.0B
30 percent effective on induced GDP
Net fiscal cost
$61.0B
Headline minus revenue offset

Formulas

  1. weighted_mult = sum(share_i * baseline_mult_i) for i in {invest, cons, tax_hi, tax_lo, transfers, defense}
  2. slack_adj = 1 + 0.4 * max(0, -output_gap) (each 1pp of negative gap adds 0.4 to multiplier scale)
  3. mp_adj = {accommodative: 1.3, neutral: 1.0, restrictive: 0.7}
  4. open_adj = 0.92 ^ (max(0, openness - 10) / 10)
  5. composite_mult = weighted_mult * slack_adj * mp_adj * open_adj
  6. year1_gdp = package_size * composite_mult
  7. year3_gdp = year1_gdp * (1 + 0.6 + 0.6^2)
  8. jobs = (year1_gdp / 1B) * 11,000
  9. tax_offset = year3_gdp * 0.30
  10. net_cost = package_size - tax_offset

Methodology

Baseline multipliers come from the Auerbach-Gorodnichenko (2012) regime-switching VAR, the CBO (2015) compositional table, the Ramey (2019) Handbook of Macroeconomics survey, and the Zidar (2019) tax decomposition. The state-dependent adjustments combine three documented findings: multipliers are larger when the output gap is negative (Auerbach-Gorodnichenko 2012; Jorda-Taylor 2016), larger when monetary policy is accommodative or at the zero lower bound (Christiano-Eichenbaum-Rebelo 2011; Eggertsson-Krugman 2012), and smaller in open economies because some demand leaks abroad through imports (Ilzetzki-Mendoza-Vegh 2013).

The multipliers used here are aggregate point estimates with wide confidence intervals. Empirical 95 percent bounds typically span 0.5 on the high-MPC categories (tax cuts to low-income, transfers, investment) and 0.4 on the low-MPC categories (tax cuts to high-income, government consumption). For an actual scoring exercise, run the package through a structural model (Federal Reserve FRB/US, IMF GIMF, or CBO macroeconomic policy module) and present a fan chart, not a point estimate.

The 11,000 jobs per billion of GDP heuristic is from the CBO 2010 ARRA scoring; it is appropriate for short-horizon impact in the US, with downside skew when slack is small. The 30 percent revenue offset reflects the federal-plus-state effective rate on induced personal and corporate income; in deep recessions automatic stabilizers raise the offset to 40 percent.

For the full Fiscal Multiplier Bench framework with state-dependent VAR estimation, scenario tables, and category- level uncertainty bands, see the methodology one-pager. Adjacent reading: fiscal insights and the policy impact modeling practice.

Sources for default values and benchmarks: Auerbach and Gorodnichenko, "Measuring the Output Responses to Fiscal Policy," AEJ Economic Policy 2012; Ramey, "Macroeconomic Shocks and Their Propagation," Handbook of Macroeconomics 2019; Zidar, "Tax Cuts for Whom?" JPE 2019; Mertens and Olea, QJE 2018; Christiano, Eichenbaum, Rebelo, JPE 2011; Ilzetzki, Mendoza, Vegh, JME 2013; Nakamura and Steinsson, AER 2014; CBO, "Estimated Impact of the ARRA on Employment and Economic Output," 2010 to 2015 series; BEA NIPA 2024.