Jeremy Piger (University of Oregon) presented Auerbach and Gorodnichenko (2012), in which the authors try to estimate a state-dependent fiscal multiplier using a simple SVAR approach. Previous estimates of the fiscal multiplier have ranged from about 0.5 to 1, but these studies have looked at an average response of output to spending shocks, implicitly treating expansion and recession regimes as identical.

To allow for regime switching the authors create a smooth switching function which depends on lags of output growth to create a linear combination of coefficients in expansion and recession regimes. They then construct impulse response functions to a government spending shock and report peak responses as the multiplier. During expansions, estimates of the fiscal multiplier range from 0.5 to 1. During recessions, their estimates imply a multiplier between 1 and 1.5, suggesting fiscal policy can be very effective at diminishing the magnitude and possible length of recessionary episodes.

A link to the paper can be found here.