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How Big are Fiscal Multipliers in Latin America?
Author: Jorge Restrepo
Series:
IMF Working Papers
Volume/Issue:
Volume 2020: Issue 017
Language:
English
Publication Date:
31 Jan 2020
DOI:
https://0-doi-org.library.svsu.edu/10.5089/9781513526836.001
ISBN:
9781513526836
ISSN:
1018-5941
Pages:
23
Keywords:
WP; tax multiplier; SVAR trough multiplier; cumulative multiplier; peak multiplier; cummulative multiplier; Structural vector autoregression; Vector autoregression; Fiscal multipliers; Western Hemisphere; Caribbean; Global; Macroeconomic Policy; Stabilization; Fiscal Policy; Multipliers
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper uses the strategy and data of Blanchard and Perotti (BP) to identify fiscal shocks and estimate fiscal multipliers for the United States. With these results, it computes the cumulative multiplier of Ramey and Zubairy (2018), now common in the literature. It finds that, contrary to the peak and through multipliers reported by BP, the cumulative tax multiplier is much larger than the cumulative spending one. Hence, the conclusions depend on the definition of multiplier. This methodology is also used to estimate the effects of fiscal shocks on economic activity in eight Latin American countries. The results suggest that the fiscal multipliers vary significantly across countries, and in some cases multipliers are larger than previously estimated.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund