Fiscal multiplier/Tutorials

Christine Romer has argued that that it is "incredibly hard" to estimate the value of a multiplier because fiscal actions are often taken in response to other things happening in the economy, and separating the impact of those other factors from the impact of fiscal change very difficult. Failure to do so can result in omitted-variable bias resulting in an underestimate of the multiplier - an error that Ms Romer believes to be common.