Government spending cuts in recessions worsen economic downturns, study finds.
Government spending multipliers in recessions and expansions depend on whether spending is increasing or decreasing. In some cases, government spending goes down during recessions, not up as expected. The long-run multiplier for bad times is 2.3 when spending goes up, compared to 1.3 when just looking at recession vs. expansion. Developing countries see a larger multiplier when government spending decreases during recessions.