The effects of fiscal policy shocks: evidence from a Bayesian SVAR model with uncertain identifying assumptions

Anna Sznajderska, Karol Szafranek and Alfred A. Haug

Macroeconomic Dynamics, 2026, vol. 30, -

Abstract: We explore the effects of fiscal policy shocks on aggregate output and inflation. We use the Bayesian econometric methodology of Baumeister and Hamilton applied to the fiscal structural vector autoregressive model to evaluate key elasticities and fiscal multipliers using U.S. data. In our baseline specification that ends before Covid pandemic, the government spending multiplier is equal to approximately $0.57$ and tax multiplier is approximately $-0.35$ after one year. The short-term output elasticity of government spending is statistically insignificant and the output elasticity of taxes is approximately equal to $2.26$ .

Date: 2026
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