Sheng, XinGupta, Rangan2023-03-022023-03-022022-08-08Sheng, X.; Gupta, R. The State-Level Nonlinear Effects of Government Spending Shocks in the US: The Role of Partisan Conflict. Sustainability 2022, 14, 11299. https://DOI.org/10.3390/su141811299.2071-1050 (online)10.3390/su141811299https://repository.up.ac.za/handle/2263/89929Utilising a nonlinear (regime-switching) mixed-frequency panel vector autoregression model, we study the effects of government spending shocks in the United States (US) over the business cycle, while considering the role of partisan conflict. In particular, we investigate whether partisan conflict is relevant to the differences in fiscal spending multipliers in expansionary and recessionary business cycle phases upon the impact of annual government spending shocks, using quarterly state-level data covering 1950:Q1 to 2016:Q4. We find new evidence that fiscal multipliers can vary with economic and political conditions. The cumulated effects of government spending shocks are strong and persistent in recessions when the level of partisan conflict is low.en© 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license.Government spending shocksFiscal policy multiplierPartisan conflictPanel analysisVector autoregressionsMixed-frequencyUnited States (US)Article