Is the supermultiplier currently nil? - A replication study of Deleidi and Mazzucato (2021)

Analyzing US macro data via a structural vector-autoregressive model (SVAR), Deleidi and Mazzucato (2021) find strong positive spillovers from mission-oriented government spending on private research and development, as well as on overall economic activity (“crowding in”). Deleidi and Mazzucato apply the SVAR to first-differenced data despite the possibility of cointegration. The replication shows that the result hinges on the transformation of the data and the choice of the sample period. The time variation of the estimation results is substantial. When estimating the model with data starting after 1985, the results point to a temporary “crowding out” of private research and development spending.