Characterizing G-multipliers in Canada

Fabrice Dabiré (), Hashmat Khan (), Patrick Richard () and Jean-François Rouillard
Additional contact information
Fabrice Dabiré: Department of Economics, Université de Sherbrooke
Patrick Richard: Department of Economics, Université de Sherbrooke, https://www.usherbrooke.ca/ecole-gestion/personnel/professeurs/economique/patrick-richard

No 21-14, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We estimate the effects of government spending (G) on GDP in Canada using the sign restricted VAR approach with quarterly data that spans from 1961 to 2019. The variables that enter our vector autoregressive model are carefully chosen to reflect the distinct characteristics of the Canadian economy, in particular, its linkages with US business cycles. We find large median multipliers that are above 1 on impact and in the long-run. They are not specific to the state of the economy. Moreover, neither net exports nor real exchange rates nor terms-of-trade respond significantly to G shocks. We also find large and long-lasting effects of shocks specific to government spending in investment and in consumption on output.

Keywords: government spending multipliers; sign restricted VARs; Canadian economy (search for similar items in EconPapers)
JEL-codes: C51 E32 E62 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-12-16, Revised 2023-03-14
New Economics Papers: this item is included in nep-des and nep-mac
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Published: Carleton Economics Papers

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Working Paper: Characterizing G-multipliers in Canada (2023)
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