Multiplier effects of social protection: a SVAR approach for Brazil

Marina da Silva Sanches and Laura Barbosa de Carvalho

International Review of Applied Economics, 2023, vol. 37, issue 1, 93-112

Abstract: Based on a Structural VAR approach, we estimated fiscal multipliers for social benefits in Brazil for 1997–2018. Our results suggest that social benefits have relatively large multiplier effects, even when compared to public investment. The multipliers are also larger in the full sample, which includes the country’s 2014–16 economic crisis than in the period 1997–2014. In particular, our results show that spending one unit on social expenditures generates a final change in GDP of almost three after two years. The higher estimated multipliers in the full sample appear in the response of household consumption and private investment to shocks in total social expenditures and for different types of social benefits (e.g. cash transfers, unemployment insurance, and pensions). In a context in which the expansion of social protection became prominent as a response to structural changes in the labor market and the Covid-19 pandemic, our paper reinforces its potential role in the short-run economic recovery.

Date: 2023
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DOI: 10.1080/02692171.2022.2117286

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