Government Spending (Kraay)

Government spending multipliers in developing countries – Evidence from lending by official creditors Aart Kraay published by World Bank (06/2012). “…The key identifying assumption is that loan approvals, and the decision to embark on the associated spending plans, do not anticipate future shocks to growth. Given this assumption, fluctuations in disbursements that are attributable to fluctuations in past loan approval decisions are plausible exogenous to contemporaneous shocks, and can be used as an instrument for fluctuations in government spending.”