  We investigate state-dependent effects of fiscal multipliers and allow for
endogenous sample splitting to determine whether the US economy is in a slack
state. When the endogenized slack state is estimated as the period of the
unemployment rate higher than about 12 percent, the estimated cumulative
multipliers are significantly larger during slack periods than non-slack
periods and are above unity. We also examine the possibility of time-varying
regimes of slackness and find that our empirical results are robust under a
more flexible framework. Our estimation results point out the importance of the
heterogenous effects of fiscal policy and shed light on the prospect of fiscal
policy in response to economic shocks from the current COVID-19 pandemic.
