Use and misuse of input-output and sam multipliers: where are we standing?

Multipliers are a key element in the public discussion about fiscal policies and spending programs. In this discussion, Input-Output and Social Accounting Matrices still play an important role, although they are more and more in competition with DSGE and econometric models. Yet IO multipliers models are particularly suitable to misuse or misunderstanding. In this paper we review certain misuses of such multipliers. We illustrate these issues by taking various examples based on recent experiences in Italy. We also propose a computation of the impacts of a complex spending program, the Italian Recovery fund discussed in 2021. The proposed computation corrects for most of the possible distortions that are usually observed in the use of IO multipliers to inform policy making. When due consideration is exerted, the results of policy simulation provide far less support to public spending. Generally, IO appears prone to misuse and there appears little room for it to properly inform policy maker.