Empirical Estimation of Fiscal Multipliers in MENA Oil-Exporting Countries with an Application to Algeria

Maria Elkhdari, Moez Souissi and Andrew Jewell

No 2018/124, IMF Working Papers from International Monetary Fund

Abstract: At a time when Algeria must undertake considerable fiscal consolidation to restore sustainability, the issue of fiscal multipliers has come to the fore. This paper estimates short-term and long-term fiscal multipliers for Algeria applying several econometric methodologies, including Local Projection Methodology and Vector Autoregressive Models, and using both Algeria-specific and panel data. The paper also explores asymmetries related to the sign of the output gap as well as the direction of spending. The results suggest that (i) average fiscal multipliers for Algeria are generally moderate and below unity; (ii) the impact of public spending shocks is more important when the output gap is negative; (iii) fiscal spending multipliers are significantly larger during spending contraction than expansion; (iv) procyclicality in public spending does not appear to affect output, except for capital spending cuts when the output gap is negative; and (v) while multipliers associated with countercyclical public spending can be sizeable, a contraction in current spending does not materially affect non-oil GDP.

Keywords: WP; government spending; Fiscal policy; State-dependent multipliers; Output gap; Spending direction; Algeria; Structural Vector Autoregressive Model; Local Projection Methodology; fiscal multiplier; spending multiplier; spending decrease multiplier; output gap dummy; public spending data; oil GDP; oil-exporting country; fiscal policy shock; government expenditure shock; decrease multiplier; Capital spending; Current spending; Fiscal multipliers; Middle East; North Africa; East Africa; Global (search for similar items in EconPapers)
Pages: 39
Date: 2018-05-31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=45906 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2018/124

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().