The Macroeconomic Effects of Government Spending Shocks in New Zealand

Yifei Lyu ()
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Yifei Lyu: The Treasury, https://treasury.govt.nz/

No 21/02, Treasury Working Paper Series from New Zealand Treasury

Abstract: This paper estimates the macroeconomic effects of government spending shocks in New Zealand. Using a structural vector autoregression (SVAR) model, I find small output multipliers for government consumption but large multipliers for government investment. Importantly, the real exchange rate appreciates after positive government spending shocks, consistent with classic theory. Private consumption and private investment decrease after government consumption shocks, but increase after government investment shocks. I show that selecting the appropriate series for government investment is important to estimating its effects.

Keywords: government consumption; government investment; New Zealand; multiplier; VAR (search for similar items in EconPapers)
JEL-codes: C32 E32 E62 H30 H54 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2021-06
New Economics Papers: this item is included in nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:21/02

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