Key points are not available for this paper at this time.
Summary I examine the properties of cross‐sectional estimators of multipliers, elasticities, or pass‐throughs when a conventional spatial macroeconomic specification generates the data. A number of important biases plague standard estimates; the most relevant one occurs when the units display heterogeneous dynamics. Methods that work well in this situation are suggested. An experimental setting shows the magnitude of the biases cross‐sectional estimators display. Average estimates of local fiscal multipliers in the US states are compared and contrasted.
Fabio Canova (Tue,) studied this question.