IESET.
Hypotheses·fiscal·zlb_state_dependent_multiplier_pk_framing

Across OECD economies 1995-2021, the cumulative fiscal multiplier on real output at the zero lower bound (defined as quarters with policy rate ≤ 0.50% AND inflation expectations anchored below 2.5%) exceeds 1.2 at horizon h=8 quarters, while the comparable normal-regime multiplier is below 0.7.

The state-dependent gap of ≥0.5 is robust to fiscal-shock identification (narrative, forecast-error, and defence-news IV), supports the PK functional-finance prediction that fiscal expansion at slack is genuinely expansionary rather than crowding out, and refutes the standard Ricardian-equivalence prediction of multipliers below unity. Hypothesis is framed from PK functional-finance priors rather than the New-Keynesian state-dependence priors that animate the existing fiscal_multipliers_zlb_higher_than_normal_regime spec; the empirical surface is similar but the framing locates the multiplier-gap in genuine demand-side activation rather than in a log-linearised crowding-out suppression at the ZLB.

INCONCLUSIVEengine/runs/zlb_state_dependent_multiplier_pk_framing

INCONCLUSIVE_DATA_PENDING — no treatment variable loaded; missing: ['oecd:NAQ_government_consumption', 'manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidations', 'constructed: indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflation expectations ≤ 2.5%']

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

In plain terms, this asks whether government consumption shock is actually linked to better or worse real income growth quarterly from 1995 to 2021.

plain answer

This test cannot make a firm call yet. no treatment variable loaded; missing: ['oecd:NAQ_government_consumption', 'manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidations', 'constructed: indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflation expectations ≤ 2.5%']

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 21 country or place units from 1995 to 2021, using a lp iv design, with fixed effects for country and year.

what was measured
What changed
  • Government consumption shock
  • Narrative fiscal shock
What we checked
  • Real income growth quarterly
  • Real income level
  • Unemployment rate
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/zlb_state_dependent_multiplier_pk_framing
1007550250199520082021AUSAUTBELCANCHEDEUDNK
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_growth_quarterly across 21 sampled countries over 1995–2021.
The shapes above are stylised — none of the lines are real data.
Placeholder for zlb_state_dependent_multiplier_pk_framing. Published chart will be generated from engine/runs/zlb_state_dependent_multiplier_pk_framing/chart_data.json.

Pre-registration

pre-registered
first-spec commit 098ce96 · 2026-04-30T12:57:33Z
run generated · 2026-05-01T08:48:57Z

Across OECD economies 1995-2021, the cumulative fiscal multiplier on real output at the zero lower bound (defined as quarters with policy rate ≤ 0.50% AND inflation expectations anchored below 2.5%) exceeds 1.2 at horizon h=8 quarters, while the comparable normal-regime multiplier is below 0.7. The state-dependent gap of ≥0.5 is robust to fiscal-shock identification (narrative, forecast-error, and defence-news IV), supports the PK functional-finance prediction that fiscal expansion at slack is genuinely expansionary rather than crowding out, and refutes the standard Ricardian-equivalence prediction of multipliers below unity. Hypothesis is framed from PK functional-finance priors rather than the New-Keynesian state-dependence priors that animate the existing fiscal_multipliers_zlb_higher_than_normal_regime spec; the empirical surface is similar but the framing locates the multiplier-gap in genuine demand-side activation rather than in a log-linearised crowding-out suppression at the ZLB.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if any of the following hold on the OECD quarterly panel 1995-2021: (a) the cumulative ZLB multiplier on real GDP at h=8 quarters is below 1.0, (b) the normal-regime multiplier at h=8 is above 1.0, OR (c) the gap (ZLB minus normal) is below 0.5 at p<0.10 in the state-dependent LP-IV. Robustness requirements: gap result must hold under both narrative and forecast-error fiscal-shock identification; failure under both refutes; failure under one but not the other is INFORMATIVE-mixed.

formal test & threshold
test:      state_dependent_lp_iv_zlb_multiplier_gap
threshold: cumulative_multiplier_zlb_h8 >= 1.2 AND cumulative_multiplier_normal_h8 < 0.7 AND gap_p_value < 0.10

Method

Template
lp_iv
Fixed effects
country, year
Clustering
country
Sample
21 countries · 1995 – 2021
Evidence type
associational

State-dependent LP-IV (Ramey-Zubairy / Auerbach-Gorodnichenko) with regime indicator (ZLB-anchored vs normal) on OECD quarterly panel 1995-2021. Identified fiscal shocks via narrative and forecast-error series; instrumented by Ramey defence-news. Cumulative multiplier at h=8 quarters constructed per Ramey-Zubairy. Robustness: regime-cutoff sensitivity (0.25%, 0.50%, 0.75%); anchored-expectations cutoff sensitivity (2.0%, 2.5%, 3.0%).

Data

VariableSourceTransform
real_gdp_growth_quarterly
outcome
oecd:NAQ_GDPtier 2
imf:NGDP_RPCHtier 2
fred:GDPC1tier 1
pct_yoy
real_gdp_level
outcome
oecd:NAQ_GDPtier 2
fred:GDPC1tier 1
log_level
unemployment_rate
outcome
oecd:harmonised_unemploymenttier 2
ilostat:unemployment_ratetier 2
pct_labour_force
real_consumption
outcome
oecd:NAQ_consumptiontier 2
fred:PCEC96tier 1
log_level
government_consumption_shock
treatment
oecd:NAQ_government_consumptiontier 2
pct_gdp_innovation
narrative_fiscal_shock
treatment
manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidationspct_gdp
zlb_anchored_regime_indicator
treatment
constructed:indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflatier 5
binary
short_term_policy_rate
control
fred:DFFtier 1
ecb:FMtier 1
boj:policy_ratetier 1
boe:IUDBEDRtier 1
rba:cash_ratetier 1
statcan:overnight_ratetier 1
level_pct
output_gap
control
oecd:OutputGaptier 2
pct_potential
cyclically_adjusted_primary_balance
control
imf:GGXCNL_NGDPtier 2
oecd:underlying_primary_balancetier 2
pct_gdp
inflation_expectations_5y
control
ecb:5Y_inflation_swaptier 1
fred:T5YIEtier 1
level_pct

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — zlb_state_dependent_multiplier_pk_framing

Verdict: INCONCLUSIVE_DATA_PENDING — no treatment variable loaded; missing: ['oecd:NAQ_government_consumption', 'manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidations', 'constructed: indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflation expectations ≤ 2.5%']

Pre-registration

  • Claim: Across OECD economies 1995-2021, the cumulative fiscal multiplier on real output at the zero lower bound (defined as quarters with policy rate ≤ 0.50% AND inflation expectations anchored below 2.5%) exceeds 1.2 at horizon h=8 quarters, while the comparable normal-regime multiplier is below 0.7. The state-dependent gap of ≥0.5 is robust to fiscal-shock identification (narrative, forecast-error, and defence-news IV), supports the PK functional-finance prediction that fiscal expansion at slack is genuinely expansionary rather than crowding out, and refutes the standard Ricardian-equivalence prediction of multipliers below unity. Hypothesis is framed from PK functional-finance priors rather than the New-Keynesian state-dependence priors that animate the existing fiscal_multipliers_zlb_higher_than_normal_regime spec; the empirical surface is similar but the framing locates the multiplier-gap in genuine demand-side activation rather than in a log-linearised crowding-out suppression at the ZLB.
  • Falsification rule: The hypothesis is falsified if any of the following hold on the OECD quarterly panel 1995-2021: (a) the cumulative ZLB multiplier on real GDP at h=8 quarters is below 1.0, (b) the normal-regime multiplier at h=8 is above 1.0, OR (c) the gap (ZLB minus normal) is below 0.5 at p<0.10 in the state-dependent LP-IV. Robustness requirements: gap result must hold under both narrative and forecast-error fiscal-shock identification; failure under both refutes; failure under one but not the other is INFORMATIVE-mixed.
  • Falsification test: state_dependent_lp_iv_zlb_multiplier_gap

Estimate

  • Error: no treatment variable loaded; missing: ['oecd:NAQ_government_consumption', 'manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidations', 'constructed: indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflation expectations ≤ 2.5%']

Variables resolved

  • oecd:NAQ_GDP; imf:NGDP_RPCH; fred:GDPC1 → real_gdp_growth_quarterly (outcome, publisher=imf, n=10914)
  • oecd:NAQ_GDP; fred:GDPC1 → real_gdp_level (outcome, publisher=fred, n=80)
  • oecd:NAQ_consumption; fred:PCEC96 → real_consumption (outcome, publisher=fred, n=20)
  • fred:DFF; ecb:FM; boj:policy_rate; boe:IUDBEDR; rba:cash_rate; statcan:overnight_rate → short_term_policy_rate (controls, publisher=fred, n=1533)
  • oecd:OutputGap → output_gap (controls, publisher=oecd, n=3331)
  • imf:GGXCNL_NGDP; oecd:underlying_primary_balance → cyclically_adjusted_primary_balance (controls, publisher=imf, n=8848)
  • ecb:5Y_inflation_swap; fred:T5YIE → inflation_expectations_5y (controls, publisher=fred, n=504)

Variables missing data

  • oecd:harmonised_unemployment; ilostat:unemployment_rate (outcome, name=unemployment_rate) — vintage not on disk
  • oecd:NAQ_government_consumption (treatment, name=government_consumption_shock) — vintage not on disk
  • manual: Ramey-Zubairy military news shocks; Guajardo-Leigh-Pescatori narrative consolidations (treatment, name=narrative_fiscal_shock) — vintage not on disk
  • constructed: indicator = 1 in country-quarters where short-rate (fred:DFF, ecb:FM, boj:policy_rate, boe:IUDBEDR) ≤ 0.50% AND 5y inflation expectations ≤ 2.5% (treatment, name=zlb_anchored_regime_indicator) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-05-01T08:48:57+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Companion to the existing fiscal_multipliers_zlb_higher_than_normal_regime draft. Where that draft is framed from CER / Auerbach-Gorodnichenko New-Keynesian state-dependence, this hypothesis is framed from PK functional-finance: deficit-driven nominal demand creation in a slack regime is genuinely expansionary and the multiplier-gap is the observable signature, not a temporary artefact of suppressed crowding-out. Tests the same empirical surface but pre-registers a sharper threshold (gap ≥0.5) and the PK rather than NK interpretation.

Authored framework. Read the transparency note.