How cultural values shape fiscal spending multipliers: a worldwide analysis

This study examines the intricate nexus between cultural values and fiscal spending multipliers. Leveraging quarterly panel data spanning 37 countries from 1974 to 2021, we scrutinize the impact of the six Hofstede cultural dimensions on fiscal spending multipliers. Through the application of panel structural vector autoregressions, our analysis reveals several key findings: (i) Individualism, indulgence, and masculinity cultural values amplify fiscal spending multipliers, whereas power distance, long-term orientation, and uncertainty avoidance cultural values dampen their effects; (ii) The presence of a robust welfare system diminishes the magnifying impact of individualism and masculinity on fiscal spending multipliers; (iii) Corruption mitigates the diminishing influence of power distance cultural values on fiscal spending multipliers; (iv) Anticipations of future inflation weaken the constraining effects of uncertainty avoidance and long-term orientation cultural values on fiscal spending multipliers. These discoveries shed light on the nuanced relationships between cultural values and fiscal outcomes, offering valuable insights for policymakers and researchers alike. © 2025 Informa UK Limited, trading as Taylor & Francis Group.