Characterizing G-multipliers in Canada
Fabrice Dabiré (),
Hashmat Khan (),
Patrick Richard () and
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Fabrice Dabiré: Université de Sherbrooke
Patrick Richard: Université de Sherbrooke
Cahiers de recherche from Departement d'Ã©conomique de l'Ã‰cole de gestion Ã l'UniversitÃ© de Sherbrooke
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 restrictions; Canadian economy (search for similar items in EconPapers)
JEL-codes: C51 E32 E62 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2021-10, Revised 2023-03
New Economics Papers: this item is included in nep-mac
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Working Paper: Characterizing G-multipliers in Canada (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:21-01
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