Uncovering time variation in public expenditure multipliers: new evidence

Paras Sachdeva (), Wasim Ahmad and N R Bhanumurthy
Additional contact information
Paras Sachdeva: Indian Institute of Technology Kanpur

Indian Economic Review, 2023, vol. 58, issue 2, No 8, 445-483

Abstract: Abstract The paper provides fresh evidence on the dynamics of public expenditure multipliers and the factors explaining them. The findings of this paper may facilitate the policymakers in effectively framing fiscal policy to expedite economic stabilisation and uplift economic growth. The paper proceeds with computing the time-varying public expenditure multipliers by employing the time-varying parameter–vector autoregressive (TVP–VAR) model on the Indian quarterly data set between 1997Q1 and 2019Q4. It then examines the role of structural factors in explaining the time variation in public expenditure multipliers. The empirical investigation reveals the heterogeneity in time-varying transmission and effectiveness of revenue capital and total expenditure shocks. The study further finds the adverse effects of fiscal instability and trade openness on public expenditure multipliers. The financial development and propensity to consume augment the public expenditure multiplier values. The findings also provide insights into the periodic impact of expenditure multipliers, which is relevant for policymakers.

Keywords: Indian economy; Fiscal policy; Time-varying fiscal multiplier; TVP–VAR (search for similar items in EconPapers)
JEL-codes: C11 C32 E32 E62 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s41775-023-00175-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:inecre:v:58:y:2023:i:2:d:10.1007_s41775-023-00175-y

Ordering information: This journal article can be ordered from
https://www.springer.com/economics/journal/41775

DOI: 10.1007/s41775-023-00175-y

Access Statistics for this article

Indian Economic Review is currently edited by Uday Bhanu Sinha, Abhijit Banerji, Shreekant Gupta and J.V. Meenakshi

More articles in Indian Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().