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How Big (Small?) are Fiscal Multipliers?

2011-03-01 Business & Economics
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Release : 2011-03-01
Genre : Business & Economics
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Book Rating : 022/5 ( reviews)

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Book Synopsis How Big (Small?) are Fiscal Multipliers? by : Ethan Ilzetzki

Download or read book How Big (Small?) are Fiscal Multipliers? written by Ethan Ilzetzki. This book was released on 2011-03-01. Available in PDF, EPUB and Kindle. Book excerpt: We contribute to the intense debate on the real effects of fiscal stimuli by showing that the impact of government expenditure shocks depends crucially on key country characteristics, such as the level of development, exchange rate regime, openness to trade, and public indebtedness. Based on a novel quarterly dataset of government expenditure in 44 countries, we find that (i) the output effect of an increase in government consumption is larger in industrial than in developing countries, (ii) the fisscal multiplier is relatively large in economies operating under predetermined exchange rate but zero in economies operating under flexible exchange rates; (iii) fiscal multipliers in open economies are lower than in closed economies and (iv) fiscal multipliers in high-debt countries are also zero.

Getting Into the Nitty-Gritty of Fiscal Multipliers: Small Details, Big Impacts

2023-02-10 Business & Economics
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Release : 2023-02-10
Genre : Business & Economics
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Book Rating : /5 ( reviews)

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Book Synopsis Getting Into the Nitty-Gritty of Fiscal Multipliers: Small Details, Big Impacts by : José Federico Geli

Download or read book Getting Into the Nitty-Gritty of Fiscal Multipliers: Small Details, Big Impacts written by José Federico Geli. This book was released on 2023-02-10. Available in PDF, EPUB and Kindle. Book excerpt: Despite the remarkable progress the literature has made throughout the past years in studying fiscal multipliers, estimates still vary considerably across studies. Partly, estimates differ because of context-specific variables that affect multipliers, but also because of the lack of a standardized framework to calculate and report them, making comparisons among studies hard to make. In this paper, we use a large panel of countries to study how some important methodological details affect the empirical estimates. Focusing on emerging economies, we show how slight changes in the filtering approach of fiscal forecast errors or the accumulation procedure of responses can significantly impact estimates. We emphasize that one of the most important features of estimating multipliers is the endogenous dynamic responses of fiscal variables to fiscal shocks, and therefore we argue against reporting multipliers as simply the output response to exogenous fiscal innovations. Although our baseline results are in line with the previous studies, our standardized framework allow us to make fairer comparisons of multiplier estimates across budgetary items and country income groups.

Fiscal Policy Multipliers in Small States

2019-03-26 Business & Economics
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Release : 2019-03-26
Genre : Business & Economics
Kind : eBook
Book Rating : 994/5 ( reviews)

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Book Synopsis Fiscal Policy Multipliers in Small States by : Ali Alichi

Download or read book Fiscal Policy Multipliers in Small States written by Ali Alichi. This book was released on 2019-03-26. Available in PDF, EPUB and Kindle. Book excerpt: Government debt in many small states has risen beyond sustainable levels and some governments are considering fiscal consolidation. This paper estimates fiscal policy multipliers for small states using two distinct models: an empirical forecast error model with data from 23 small states across the world; and a Dynamic Stochastic General Equilibrium (DSGE) model calibrated to a hypothetical small state’s economy. The results suggest that fiscal policy using government current primary spending is ineffective, but using government investment is very potent in small states in affecting the level of their GDP over the medium term. These results are robust to different model specifications and characteristics of small states. Inability to affect GDP using current primary spending could be frustrating for policymakers when an expansionary policy is needed, but encouraging at the current juncture when many governments are considering fiscal consolidation. For the short term, however, multipliers for government current primary spending are larger and affected by imports as share of GDP, level of government debt, and position of the economy in the business cycle, among other factors.

Building Back Better: How Big Are Green Spending Multipliers?

2021-03-19 Business & Economics
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Release : 2021-03-19
Genre : Business & Economics
Kind : eBook
Book Rating : 469/5 ( reviews)

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Book Synopsis Building Back Better: How Big Are Green Spending Multipliers? by : International Monetary Fund

Download or read book Building Back Better: How Big Are Green Spending Multipliers? written by International Monetary Fund. This book was released on 2021-03-19. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides estimates of output multipliers for spending in clean energy and biodiversity conservation, as well as for spending on non-ecofriendly energy and land use activities. Using a new international dataset, we find that every dollar spent on key carbon-neutral or carbon-sink activities can generate more than a dollar’s worth of economic activity. Although not all green and non-ecofriendly expenditures in the dataset are strictly comparable due to data limitations, estimated multipliers associated with spending on renewable and fossil fuel energy investment are comparable, and the former (1.1-1.5) are larger than the latter (0.5-0.6) with over 90 percent probability. These findings survive several robustness checks and lend support to bottom-up analyses arguing that stabilizing climate and reversing biodiversity loss are not at odds with continuing economic advances.

How Strong are Fiscal Multipliers in the GCC?

2011-03-01 Business & Economics
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Release : 2011-03-01
Genre : Business & Economics
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Book Rating : 058/5 ( reviews)

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Book Synopsis How Strong are Fiscal Multipliers in the GCC? by : Mr.Raphael A. Espinoza

Download or read book How Strong are Fiscal Multipliers in the GCC? written by Mr.Raphael A. Espinoza. This book was released on 2011-03-01. Available in PDF, EPUB and Kindle. Book excerpt: The effectiveness of fiscal policy in smoothing the impact of shocks depends critically on the size of fiscal multipliers. This is particularly relevant for the GCC countries given the need for fiscal policy to cushion the economy from large terms of trade shocks in the absence of an independent monetary policy and where fiscal multipliers could be weak dues to substantial leakages through remittances and imports. The paper provides estimates of the size of fiscal multipliers using a variety of models. The focus is on government spending since tax revenues are small. The long-run multiplier estimates vary in the 0.3-0.7 range for current expenditure and 0.6-1.1 for capital spending, depending on the particular specification and estimation method chosen. These estimates fall within the range of fiscal multiplier estimates in the literature for non-oil emerging markets.

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