Assessing The Impact Of Fiscal Shocks On Output In MENAP Countries

By Martin D. Cerisola, Chadi Abdallah, Victor A Davies, Mark Fischer

March 23, 2015

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Martin D. Cerisola, Chadi Abdallah, Victor A Davies, and Mark Fischer. Assessing The Impact Of Fiscal Shocks On Output In MENAP Countries, (USA: International Monetary Fund, 2015) accessed November 21, 2024

Disclaimer: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This note is a reference guide to the econometric work on fiscal multipliers for MENAP countries. Spending and tax multipliers are estimated from conventional VAR models and identified using a sign-restrictions approach. Estimates show that fiscal multipliers tend to be small, except for those associated with government investment spending, which generally exceed unity. For the average MENAP country, fiscal multipliers for current spending, government consumption and government investment spending are 0.5, 0.8, and 1.1,respectively, while the tax revenues multiplier is estimated at around –0.4. There is also significant variation in the size of these multipliers across countries, consistent with differences in economic fundamentals, such as openness to trade and the flexibility of the exchange rate. The estimated multipliers are generally consistent with theoretical priors, and are in line with the evidence from the literature for other economies and categories of spending and taxes.

Subject: Current spending, Exchange rate flexibility, Expenditure, Fiscal multipliers, Fiscal policy, Foreign exchange, Public investment spending, Revenue administration

Keywords: Current spending, Exchange rate flexibility, Fiscal multiplier, Fiscal multipliers, Fiscal policy, Global, Government spending multiplier, MENAP, MENAP country, Multiplier, Multiplier estimate, Multiplier template, Public investment spending, Spending, TNM

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Technical Notes and Manuals No. 2015/001
Stock No:

TNMEA2015001
ISBN:

9781498383905
ISSN:

2075-8669

Notes

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