Fiscal Multipliers in the Eurozone: A SVAR Analysis

Antonio Afonso and Frederico Leal

No 2018/47, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: We compute the value of fiscal multipliers (for government primary expenditure, Income and wealth taxes and for Production and import ones) in the Eurozone countries since the creation of the currency union (2001Q1-2016Q4), and to understand how the values may vary according to the public debt level, the rhythm of economic growth and the output gap. Imposing quarterly fiscal shocks in the period 2000-2016, the results shown that the government expenditure had a positive effect on output, with an annual accumulated multiplier of 0.64 while the tax multipliers presented negative signs - the Income and wealth and the Production and import taxes stood at -0.10 and -0.32, respectively. Furthermore, the multipliers shown higher values for countries with higher levels of public debt (to small levels, the expenditure multiplier is close to zero and the tax multipliers seem to have positive signs),during recessions, and in countries with positive output gaps.

Keywords: Fiscal multiplier; Structural VAR; Fiscal policy (search for similar items in EconPapers)
JEL-codes: B22 E62 H62 H63 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-eec and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Fiscal multipliers in the Eurozone: an SVAR analysis (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0472018

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