spending multipliers in those countries where high-frequency macroeconomic and fiscal data are available.<sup>4</sup> A third strand of the literature has proposed a variety of creative instruments to isolate a plausibly exogenous component of changes in government spending, primarily focusing on subnational government spending in the United States. Papers such as Cohen, Covall and Malloy (2010) and Fishback and Kachanovskaya (2010) have exploited political determinants of federal transfers to states, while Chodorow-Reich, Feiveson, Liscow and Woolston (2011), Serrato and Wingender (2011), and Wilson (2011) emphasize particular institutional features driving federal-state transfers that are likely to be orthogonal to state-level economic activity. Clemens and Miran (2010) and Shoag (2011) study fluctuations in state-level spending driven by variations in the stringency of balanced-budget rules, and pension fund windfalls, respectively.

Finally, two important caveats about these results are worth noting at the outset. The first is that the empirical spending multipliers I estimate are by no means deep structural parameters. As is well-known from a large body of theoretical work, the short-run effects of government spending on output depend on a host of factors including technology, preferences, the nature of spending, the associated burden of current and future taxes, the stance of monetary policy, and a range of other country- and episode-specific characteristics. In light of this, the multipliers that I estimate are best understood as a description of the short-run average empirical relationship between changes in a plausibly predetermined component of government spending and changes in output. This caveat is of course shared with the bulk of the existing empirical literature on the short-run effects of government spending. The second caveat is that, while my identification strategy relies on lending by official creditors, which frequently is a vehicle for foreign aid delivery, the resulting evidence should not be interpreted as contributing to the long-standing empirical debate on the growth effects of aid. In contrast with the aid-growth literature, which has primarily been concerned with the medium- to longrun effects of aid on growth, my interest in this paper is in the short-run cyclical effects of increased

> 4 A key practical difficulty with implementing this approach in developing countries is the relative scarcity of highfrequency data in these countries.  In a notable effort to fill this gap, Ilzetzki, Mendoza and Vegh (2010) assemble quarterly data for a sample of 20 developed and 24 emerging markets, and use this to implement BlanchardPerotti (2002)-style estimates of spending multipliers.  There are however only 11 countries in common between their emerging-market sample and the sample of 102 low- and middle-income countries used in this paper. The countries included in their 24 country sample but not mine are primarily richer emerging-market economies that rely little on borrowing from official creditors.  Conversely, my paper covers 91 developing countries not covered in Ilzetzki, Mendoza and Vegh (2010), where this source of financing of government spending is important.

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