The dynamic effects of fiscal policy and fiscal multipliers in Tunisia

Mohamed Hedi Lahouel, Moez Ben Tahar, Sarra Ben Slimane and Mohamed Ali Houfi

Applied Economics, 2024, vol. 56, issue 33, 3967-3985

Abstract: This study analyses the macroeconomic effects of fiscal policy by estimating fiscal multipliers for Tunisia. The study is based on the Structural Vector Autoregression (SVAR) model and uses quarterly data from 2000Q1 to 2019Q4. Five main insights can be drawn from these results. First, fiscal multipliers are moderate, as suggested by earlier studies. Second, spending multipliers generated by total and consumption expenditures, respectively, are small, implying that government spending generates substantial crowding out effects. Third, investment multipliers are larger than consumption multipliers. Fourth, fiscal multipliers have declined in the post-2011 revolution period, suggesting that spending multipliers are lower during times of recession. Fifth, domestic supply shocks could shape the effects of fiscal policy and cause spending multipliers to fall.

Date: 2024
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DOI: 10.1080/00036846.2023.2208855

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