State-dependent fiscal multipliers and financial dynamics: An impulse response analysis by local projections for South Africa

Serena Merrino

No wp-2021-77, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: The aim of this paper is to assess South Africa's fiscal multiplier across different states of the economy, with a focus on the financial accelerator mechanism of fiscal policy shocks, by estimating impulse response functions from both linear and non-linear local projections. The model finds evidence of strong business cycle effects such that, while the average multiplier is below 0.5, it reaches 1.2 during recessions and that, while credit volume diminishes during periods of positive output gap, it expands otherwise.

Keywords: Fiscal multipliers; impulse response; State-dependent; Credit; South Africa; Financial dynamics (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-fdg and nep-mac
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:wp-2021-77

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