How Big are Fiscal Multipliers in Latin America?

January 31, 2020

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Format: Chicago

Jorge Restrepo. How Big are Fiscal Multipliers in Latin America?, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper uses the strategy and data of Blanchard and Perotti (BP) to identify fiscal shocks and estimate fiscal multipliers for the United States. With these results, it computes the cumulative multiplier of Ramey and Zubairy (2018), now common in the literature. It finds that, contrary to the peak and through multipliers reported by BP, the cumulative tax multiplier is much larger than the cumulative spending one. Hence, the conclusions depend on the definition of multiplier. This methodology is also used to estimate the effects of fiscal shocks on economic activity in eight Latin American countries. The results suggest that the fiscal multipliers vary significantly across countries, and in some cases multipliers are larger than previously estimated.

Subject: Econometric analysis, Expenditure, Fiscal multipliers, Fiscal policy, Revenue administration, Structural vector autoregression, Vector autoregression

Keywords: Caribbean, Cummulative multiplier, Cumulative multiplier, Fiscal multipliers, Fiscal Policy, Global, Macroeconomic Policy, Multipliers, Peak multiplier, Stabilization, Structural vector autoregression, SVAR trough multiplier, Tax multiplier, Vector autoregression, Western Hemisphere, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/017
Stock No:

WPIEA2020017
ISBN:

9781513526836
ISSN:

1018-5941

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