Fiscal Multipliers

Depuis le declenchement de la crise economique et financiere internationale, la politique budgetaire a connu un vif regain d’interet dans les arenes academiques et dans les debats des policy-makers, aussi bien dans les pays avances que ceux en voie de developpement. Pour un pays en voie de developpement comme le Maroc, l’importance de la politique budgetaire reside dans le potentiel qu’elle offre en matiere de stabilisation du cycle economique et de relance de l’activite en periode de recession. Elle decoule egalement de la complexite de ses interactions avec les autres politiques economiques et sociales quel que soit leur nature, structurelle ou bien conjoncturelle. Toutefois l’efficacite de la politique budgetaire demeure conditionnee par un certain nombre de facteurs, notamment, sa capacite a adopter un comportement contra-cyclique, de gerer de maniere optimale l’arbitrage entre relance de l’activite et soutenabilite de la dette a long terme, ainsi que son aptitude a contribuer a...

L'article analyse l'introduction de la Nouvelle Gestion Publique (NGP)
au Maroc, en mettant l'accent sur la mise en œuvre du Balanced Scorecard
(BSC) pour relever les défis du secteur public. Malgré les critiques sur sa
standardisation, le BSC a été adopté dans le but d'instaurer une culture de la
performance ; l’étude montre que le BSC a permis d'améliorer la gestion
performante des organisations publiques marocaines. Grâce à une évaluation
globale liant indicateurs financiers et non financiers, le BSC a favorisé une
prise de décision plus éclairée. Cependant, des défis persistent, notamment la
résistance au changement de la part des acteurs publics et la difficulté à définir
des indicateurs de performance pertinents, l'introduction du BSC a renforcé la
transparence, la responsabilisation et l'orientation stratégique, mais nécessite
une formation continue du personnel et des ressources dédiées pour sa mise
en œuvre. Enfin, les résultats suggèrent d'étendre l'utilisation du BSC à
d'autres entités du secteur public en adoptant une approche adaptative et
personnalisée afin de maximiser les bénéfices à long terme.
The article analyzes the introduction of the New Public Management
(NPM) in Morocco, focusing on the implementation of the Balanced
Scorecard (BSC) to meet the challenges of the public sector. Despite criticism
of its standardization, the BSC was adopted with the aim of establishing a
performance culture; the study shows that the BSC has helped to improve the
performance management of Moroccan public organizations. Thanks to a
global assessment linking financial and non-financial indicators, the BSC has
fostered more informed decision-making. However, challenges remain,
notably resistance to change on the part of public players and the difficulty of
defining relevant performance indicators. The introduction of the BSC has
strengthened transparency, accountability, and strategic orientation, but
requires ongoing staff training and dedicated resources for its implementation.
Finally, the results suggest extending the use of BSC to other public sector
entities, adopting an adaptive and customized approach to maximize long-term
benefits.

PERELMAN, Sergio e Pierre PESTIEU (1993), "The Determinants of the Ricardian Equivalence in the OCDE Countries", in Verbon e Winden (eds.) (1993), 181-194 PYNDICK, Robert e Daniel RUBINFELD (1991), Econometric Models and Economic Forecasts, McGraw-Hill, 3ª ed.

A tese ricardiana sustenta que para um dado montante de despesa pública a substituição de impostos por dívida não tem qualquer efeito na procura global nem na taxa de juro. A dívida pública não tem qualquer efeito riqueza, o que faz com que em termos de efeitos na economia o financiamento da despesa pública por dívida seja equivalente ao financiamento por impostos. Só que a equivalência para se verificar necessita da reunião de um conjunto restritivo de condições. É objecto deste texto a sua avaliação crítica. Discute-se ainda a posição de David Ricardo em relação à equivalência ricardiana, concluindo-se que ele nega a sua validade de facto.

The Ricardian thesis states that, for a given expenditure path, substitution of debt for taxes has no effect on aggregate demand nor in interest rates. The public debt has no wealth effect. Therefore, in point of the economy, it is equivalent financing the public outlays by debt or taxation. But the verification of equivalence requires a restrictive whole of assumptions. It is our aim to critically appraise them. We raise also the question of whether Ricardo was in favour of Ricardian equivalence. We have concluded that he denies its actual validity.

Cet article présente une analyse critique des politiques économiques
depuis 1945, structurée autour de quatre périodes clés. De 1945 à 1980, le
keynésianisme atteint son apogée dans les années 1940 et 1960, mais
commence à s'essouffler dès le début des années 1970, ouvrant la voie à une
contre-révolution libérale. De 1980 à 2008, une pensée post-consensus de
Washington émerge, suscitant les critiques à l'encontre des thérapeutiques
préconisées par les institutions de Bretton Woods et remettant en question leur
hégémonie doctrinale. À partir de la crise de 2008, malgré le recours à des
politiques de relance budgétaires temporaires, un nouveau consensus en faveur
de la rigueur s'installe. Finalement, face à la crise pandémique mondiale du
COVID 19, le keynésianisme renaît avec le retour des plans de relance, tandis
que le remboursement de la dette liée à la COVID reste un défi pour la majorité
des pays. Plus récemment, les politiques de normalisation monétaire prennent
de l'ampleur.
Pour clarifier les concepts dans la littérature et examiner la manière dont la
recherche est menée sur le sujet, une ébauche d'un examen de la portée
(scoping review) a été réalisée, susceptible de servir de précurseur à une revue
systématique.
This article presents a critical analysis of economic policies since
1945, structured around four key periods. From 1945 to 1980, Keynesianism
reached its peak in the 1940s and 1960s but began to wane as early as the
1970s, paving the way for a neoliberal counter-revolution. From 1980 to 2008,
a post-Washington Consensus thinking emerged, fueling criticisms against the
therapies advocated by Bretton Woods institutions and questioning their
doctrinal hegemony. From the 2008 crisis onwards, despite the temporary
adoption of fiscal stimulus policies, a new consensus favoring austerity took
hold. Finally, faced with the global COVID-19 pandemic crisis, Keynesianism
resurged with the return of stimulus plans, while repayment of COVID-related
debt remains a challenge for the majority of countries. More recently, there
has been a growing focus on monetary normalization policies.
To clarify the concepts in the literature and examine how research is conducted
on the subject, a draft of a scoping review has been conducted, which may
serve as a precursor to a a systematic review.

Recent dissatisfaction with the impact of expenditure stimulus on economic activity in the United States, along with the results of academic research, have once again raised questions about the effectiveness of fiscal stimulus policies and about whether stimulus to a recessionary economy should be in the form of tax cuts or expenditure increases. This paper considers alternative methods for evaluating the impacts of stimulus policy strategies. We discuss conceptual challenges involved in effectiveness measurement, and we review alternative empirical approaches applied in recent studies. We then present our own estimates of policy multipliers based on simulations of the IHS Global Insight model of the US economy. Based on this review and analysis, we address the question of why recent US stimulus programs have not been more effective.

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

The present study explores the impact of tax policy on economic growth using average marginal tax rate and average tax rate for South Asian countries. The data for five developing countries: India, Maldives, Nepal, Pakistan, Sri-Lanka is used for the period of 1991-2010. This study uses Additive Mixed Models with penalized spline methodology. In this study we have constructed the average marginal tax rates using methodology of Seater (1982). It further identifies that the variables like average marginal tax rate (AMTRs), average tax rate (ATR), population growth rate, trade-openness, investment, human capital and real per capita GDP are the significant determinants of economic growth in the sample countries. On average, AMTRs and population growth rate reduce the performance of economic growth in the developing countries. The main findings further suggest that nonlinear effects are exerted by tax policy on economic growth. The increase in average marginal tax rate at the lower level...

La deuda pública de la economía española ha alcanzado niveles no vistos anteriormente en tiempos de paz. La persistencia de unas condiciones de financiación extraordinariamente favorables no será suficiente para reconducir la deuda hacia niveles que nos hagan menos vulnerables. Será necesario diseñar una estrategia de consolidación enmarcada en un marco de supervisión fiscal europeo más robusto, que tenga en cuenta tanto la heterogeneidad en los niveles de deuda de las economías europeas como los cambios en las condiciones macroeconómicas de los años recientes.

This article was interested in modeling the relationship between government spending and economic growth in morocco. We had applied the estimation method ARDL to model the long run and short run impact's dynamic of the total amount of government spending on growth rate in morocco. Results estimations, with regard the used specification, allow concluding that there is a negative impact of government spending on the economic growth. These findings are explained essentially by the non-productive character of government spending and a structure characterized by heaviness of debt spending, compensation and payroll.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

In this paper, we study the existence and uniqueness of weak solution for the system of finite difference schemes for coupled sine-Gordon equations. A novel first order of accuracy unconditionally stable difference scheme is considered. The variational method also known as the energy method is applied to prove unique weak solvability. We also present a new unified numerical method for the approximate solution of this problem by combining the difference scheme and the fixed point iteration. A test problem is considered, and results of numerical experiments are presented with error analysis to verify the accuracy of the proposed numerical method.

In this paper, we study the existence and uniqueness of weak solution for the system of finite difference schemes for coupled sine-Gordon equations. A novel first order of accuracy unconditionally stable difference scheme is considered. The variational method also known as the energy method is applied to prove unique weak solvability.We also present a new unified numerical method for the approximate solution of this problem by combining the difference scheme and the fixed point iteration. A test problem is considered, and results of numerical experiments are presented with error analysis to verify the accuracy of the proposed numerical method.

Would population aging affect the effectiveness of fiscal stimulus? Despite the renewed focus on population aging, there are few empirical studies on the output effects of fiscal policy in aging economies. Our study fills this gap by analyzing this issue in OECD countries. We find that, as population ages, the output effects of fiscal spending shocks are weakened. We also find that, while high-debt countries generally face weaker fiscal multipliers, high-debt aging economies face even weaker multipliers. These results point to important policy implications: population aging would call for a larger fiscal stimulus to support aggregate demand during recession and thus require larger fiscal space to allow a wider swing of the fiscal position without creating concerns for fiscal sustainability. Our analysis also suggests that policy measures to promote labor supply could help increase the output effect of fiscal stimulus in aging economies.

This paper investigates the interaction between fiscal policy transmission and fiscal sustainability, captured through the concept of fiscal space. In order to measure the evolution of fiscal space over time we propose four indicators, drawing from different concepts available in the literature. We use these indicators to define periods of ample and tight fiscal space. We then estimate the effects of government spending shocks in the United States according to the level of fiscal space, for the period 1929:Q1

La relation politique budgétaire et croissance économique a fait l'objet de plusieurs études et recherche. Cette relation reste ambiguë et dépend du contexte temporel et spatial. A travers notre article, nous avons voulu comprendre la liaison qui peut exister entre le solde budgétaire au Maroc et la croissance économique. Pour ce faire, nous avons utilisé les données émanant de la banque mondiale et de l'HCP sur la période 1980-2019. Les résultats ont dévoilé l'existence d'une liaison significative et positive entre le solde budgétaire et la croissance économique au Royaume.

This paper starts from Keynes' General Theory to demonstrate the existence of a non-linear Keynesian multiplier on the grounds of crosscountry data. Thus, we prove the effectiveness of short-run countercyclical exogenous stimuli during downturns. The role of fiscal spending is discussed in light of different schools of thought, including the well-known "expansionary fiscal contraction" theory. Moreover, we examine the European fiscal rules of convergenceaimed to sovereign debt sustainabilitythat affect the size of "fiscal space". Empirical data from several Eurozone countries provide evidence of traditional multipliers. Furthermore, the Greek economy displays a non-linear case of multiplier. This leads to rejecting the assumption of a weak Keynesian setting, which supported instead the IMF-backed fiscal contraction.

This survey focuses on the impact of public investment as an instrument of economic policy. The study presents and analyzes features and results of the empirical works on this theme taking into account both theory and estimations issues. In general, the studies surveyed support the idea that public investment, if projects are properly selected, raises output and welfare through both demand and supply effects and thus should be the instrument of choice of economic policy for governments and public agencies. Moreover, a considerable amount of empirical studies show that public investments have higher positive growth effects than public consumption both in the short and in the long run. In spite of a great diversity in the theoretical approaches and the empirical results, the studies surveyed tend to converge in many indications that can be useful to policy makers. Among these, in addition to several pointers on the reasons why public investments may be made more effective, is that a major challenge is to provide a new generation of global public goods for sustainable development.

Este estudo avalia a capacidade da política fiscal em suavizar o ciclo econômico brasileiro. Para tanto, são estimados multiplicadores para variáveis fiscais desagregadas. Considerando os impactos positivos da política fiscal sobre a atividade econômica, as respostas do produto aos choques diferem entre as fases recessivas e expansivas do ciclo durante o período de 1997 a 2018. Em termos de condução de política econômica, os resultados revelam que os estímulos à demanda agregada são mais adequados em um contexto recessivo. Por fim, os autores mostram que a inclusão da dívida líquida nas equações do modelo não altera o comportamento dos choques no SVAR. Contudo, embora modifique alguns resultados do MS-VAR, não se trata de uma variável predominante para a magnitude do multiplicador fiscal, pois as flutuações cíclicas prevalecem sobre o tamanho do impulso fiscal.

During the sovereign debt crisis, many Euro countries have deployed "austerity packages" implementing structural reforms and cutting government spending. Such policies should have led to an initial decline in GDP followed by recovery and a reduction of the debt to gdp ratio. Key to this outcome is the size and sign of expenditure multipliers when the economy is in a recession. We estimate, for the Eurozone countries, expenditure multipliers in recession and expansion using the linear projection approach and forecast errors to identify exogenous expenditure shocks. The empirical evidence suggests that, in a recession, an increase in government spending will be effective in boosting aggregate demand, crowding-in private consumption in the shortto-medium run, without raising the debt to gdp ratio but rather decreasing it. The opposite applies in expansions. Estimates also show that expenditure multipliers, in a recession, are larger in high debt/defict countries than in low debt/deficit countries. In a recession, fiscal consolidation based on expenditure cuts would have both short and medium run contractionary effects.

This paper provides a brief summary of the literature on fiscal multipliers and presents results for the Italian economy. The question of interest is whether an increase in government purchases leads to a greater than one-for-one increase in output, taking into account whether the zero lower bound is binding and whether initial conditions on public finances matter. Using a dynamic general equilibrium model for the Italian economy, we find that in general the government spending multiplier is lower than one, except when the monetary policy is stuck at the zero lower bound for an extended period of time. However, when the cost of borrowing for the sovereign is tightly linked to public finance conditions, the size of the government spending multiplier becomes much smaller. Tax multipliers are in all cases smaller than government consumption. Finally, we provide a tentative assessment of the fiscal consolidation measures adopted in Italy in 2011-2012 and find that the available evidence...

Organisation de Coopération et de Développement Économiques Organisation for Economic Cooperation and Development 19-Dec-2017 ___________________________________________________________________________________________ _____________ English-Or. English ECONOMICS DEPARTMENT A RE-ASSESSMENT OF FISCAL SPACE IN OECD COUNTRIES ECONOMICS DEPARTMENT WORKING PAPERS No. 1352

This article is a contribution to the analysis of the impact of fiscal policy on economic activity in Morocco. It provides a concise overview of the literature on fiscal policy. Reviewing both theoretical and empirical literature, an abundant literature focuses on the effect of spending on output and other macroeconomic variables. Some studies find that an increase in public spending has little effect on output, while others find that an expansionary fiscal policy has a positive effect on the economy, thus supporting Keynesian ideas. Most studies use data from developed countries such as the USA, Japan and Europe, but developing countries seem to have received less attention.

This article appeared in a journal published by Elsevier. The attached copy is furnished to the author for internal non-commercial research and education use, including for instruction at the authors institution and sharing with colleagues. Other uses, including reproduction and distribution, or selling or licensing copies, or posting to personal, institutional or third party websites are prohibited. In most cases authors are permitted to post their version of the article (e.g. in Word or Tex form) to their personal website or institutional repository. Authors requiring further information regarding Elsevier's archiving and manuscript policies are encouraged to visit: http://www.elsevier.com/authorsrights

Due to complexities in measuring the impact of tax policy on economic growth, there is need to explore functional relationship between response and predictors. Semi-parametric approaches are often very handy in modeling relationships which are non-linear but cant be completely described either through parametric or non-parametric approaches. To determine the effects of tax policy on economic growthfunctional, cubic smoothing spline method is used along with cross validation test to control the smoothing parameter. To replace the functional form of smoothing coefficients into linear mixed model, maximum likelihood estimation is used. Results indicate that proposed methodology is robust in determining functional form and in achieving increasing average marginal tax rates has negative impact on economic growth results. Empirical results indicate that high AMTRs and population growth rate reduce the performance of economic growth in the developing countries. A reduction on dependence of...

In a period where we witnessed one of the greatest economic crises in history, many are the legacies of these troubled times in the first decade of 2000s. The heritage that has had a great impact, especially in Europe, is the sovereign debt crisis. In this context, it is crucial to realize the impact that the increase in debt has resulted in the growth of economies. In particular, this study focuses on the case of the PIIGS, seeking to realize the impact that debt has on economic growth via TFP. According to the estimated results, we can say that during the period 1991-2013, public debt contributed around-0.067 p.p. for the economic growth in the PIIGS via PTF. The results also showed that this negative impact has worsened in the post-crisis period. The PIIGS are in a period of excess debt, in which higher debt means a higher negative impact on the growth rate of GDP. This is a problem that the national authorities must not underestimate in their political agendas because, according to IMF forecasts, debt levels tend to reverse, but still remain at levels considered excessive (greater than 100% to GDP), which consequently, will continue to be reflected in the growth of economies.

In developed economies, wealth inequality is high, while public capital is underprovided. Here, we study the impact of heterogeneity in saving behavior and income sources on the distributional effects of public investment. A capital tax is levied to finance productive public capital in an economy with two types of households: high income households who save dynastically and middle income households who save for retirement. We find that inequality is reduced the higher the capital tax rate is and that low tax rates are Pareto-improving. There is no clear-cut trade-off between efficiency and equality: middle income households' consumption is maximal at a capital tax rate that is higher than the rate which maximizes high income households' consumption.

Fiscal multipliers are important tools for macroeconomic projections and policy design. However, very little is known about the size in developing countries, given the complexity of their estimation. The unavailability of reliable high frequency data and structural characteristics of these countries also make the estimation of fiscal multipliers difficult, in such countries. This paper estimated fiscal multipliers associated with government spending and tax-related revenue for Nigeria using quarterly data, spanning 1985: Q1 to 2015Q4. The structural vector autoregression (SVAR) methodology suggested by Blanchard and Perotti (2002) was utilised in the model. The SVAR framework applied followed the approach by Favero and Giavazzi (2007) to augment for a feedback mechanism, arising from the level of debt, especially given Nigeria's rising debt level. The results showed that government spending multiplier for Nigeria was high, at 0.47 on impact and at 0.35 within a quarter. Similarly, the tax revenue multiplier was equally high at 0.67 on impact and 0.33 within a quarter. This result suggested that reform programmes, aimed at rejuvenating the economy should consider the impact of these multipliers in assessing expenditure requirements and tax plans that would achieve government objectives over the programme period.

We investigate the effects of government spending on US output with a threshold structural vector autoregressive model. We consider Bayesian model comparison and generalized impulse response analysis to test for nonlinearities in the responses of output to government spending. Our empirical findings support state-dependent effects of fiscal policy, with the government spending multiplier larger and more persistent whenever there is considerable economic slack. Based on capacity utilization as the preferred threshold variable, the estimated multiplier is large (1.6) for a low-utilization regime that accounts for more than half of the sample observations from 1967 to 2012 according to the estimated threshold level.

In this paper we examine the to-date relevance of Duesenberry´s Consumption Theory through an applied case to four economies in Latin America: Mexico, Brazil, Argentina and Colombia. Using annual time series of these countries we show that some empirical evidence of Duesenberry´s theory still holds and should not be discarded in modern macroeconomics as it has happened in regular macro text books in mainstream economics. Duesenberry´s theory includes important institutional factors that cannot be replaced by the permanent income hypothesis or the life cycle hypotheses. In the paper we explore different specifications of the consumption functions based on the relevant literature. Final conclusions are presented.

Em linha com o interesse recente e renovado sobre a relação entre desigualdade e crescimento, e o importante debate que subsiste sobre o sinal desta relação, analisamos esta questão para Portugal no período de 1985-2005 usando diferentes metodologias de séries temporais. Os resultados sugerem que a desigualdade de ganhos tem um impacto negativo no output, confirmando assim o ponto de vista de que a desigualdade é nociva ao crescimento económico. Além disso, e segundo os resultados decorrentes da análise das funções impulso-resposta baseadas no modelo preferido, um VAR estrutural (SVAR) trivariado, estes efeitos duram, nalguns casos, três anos após o choque de desigualdade. No tocante à educação, a terceira variável considerada nos nossos modelos SVAR, não se confirma a predição teórica de que mais desigualdade reduz a acumulação de capital humano; ao invés, os resultados apontam na direção oposta: um aumento da desigualdade de ganhos conduz a trabalhadores com mais educação. Assim, ...

Pour évaluer l'efficacité de la politique budgétaire en Tunisie, nous nous basons sur l'approche SVAR inspirée des travaux de Blanchard et Perotti (2002). Notre papier atteste l'efficacité macroéconomique à court terme d'une hausse structurelle des dépenses budgétaires en Tunisie avec un multiplicateur budgétaire proche de 2.7%, conformément aux modèles Keynésiens. Toutefois, l'effet estimé d'une hausse structurelle des recettes fiscales sur l'activité est non Keynésien (hausse du niveau de l'activité économique). Ceci est expliqué par la présence de l'effet de voracité pour le cas de l'économie tunisienne. Ainsi, un choc structurel des recettes fiscales entraine un ajustement rapide et immédiat des dépenses budgétaires ce qui neutralise l'effet récessif de la hausse des impôts sur l'activité économique en Tunisie.

I analyze the e¤ects of a money-…nanced …scal stimulus and compare them with those resulting from a conventional debt-…nanced stimulus. I study the e¤ects of both a tax cut and an increase in government purchases, with and without a binding zero lower bound (ZLB) on the nominal interest rate. When the ZLB is not binding, a money-…nanced …scal stimulus is shown to have much larger multipliers than a debt-…nanced …scal stimulus. That di¤erence in e¤ectiveness persists, but is much smaller, under a binding ZLB. Nominal rigidities are shown to play a major role in shaping those e¤ects.

This paper deals with theoretical foundations justifying alleged expansionary effects of fiscal consolidations. In some European countries there have been episodes of fiscal retrenchments followed by an increase in output (Sweden, Ireland, Denmark, and Finland). These have been taken as a starting point for theories advocating, contrary to the Keynesian tradition, the possibility of a negative sign of the fiscal multiplier. We show that expansionary fiscal consolidations can occur under extreme circumstances: they are not the result of pure fiscal policies, but rather they result from a policy mix in which the central bank's behaviour is crucial. On the basis of this evidence we discuss why, given the current economic scenario, immediate austerity cannot be a plausible way out from the recession in the euro-area countries. JEL Classification: E60; E62; E63 Since the pioneering works by Kahn (1931) and Keynes (1933) concerning the existence of a positive fiscal multiplier, there have been many opponents to this view. The idea that a public-sector deficit can be considered as a powerful instrument for stabilizing income reductions has been increasingly questioned. These criticisms followed the theoretical analysis included in the Treasury View and reemerged with Friedman's monetarist approach to the natural rate of unemployment. This opposition to the Keynesian view has been kept alive by crowding-out arguments, by rational expectations models and by the theories based on Ricardian equivalence. It is worth noting that all these criticisms highlighted a low or zero fiscal multiplier. However, the understanding of the effects of fiscal policies among the critics changed in the 1990s when a newer generation of critics began advocating the existence of negative fiscal multipliers. This approach gave rise to the idea that fiscal consolidations may increase output. We call this line of thinking the 'Non-Keynesian View' (hereafter, NKV) to distinguish it from the 'Keynesian View' (hereafter, KV).

We study the size of fiscal multipliers in response to a government spending shock under different household leverage conditions in a general equilibrium setting with search and matching frictions. We allow for different levels of household indebtedness by changing the intensive margin of borrowing (loan-to-value ratio), as well as the extensive margin, defined as the number of borrowers over total population. The interaction between the consumption decisions of agents with limited access to credit and the process of wage bargaining and vacancy posting delivers two main results: (a) higher initial leverage makes it more likely to find output multipliers higher than one; and (b) a positive government expenditure shock always produces a positive multiplier for vacancies and employment. The latter result is in sharp contrast with models in which some households do not have access to the financial market (RoT consumers), in which the implied labor market responses to fiscal shocks are inconsistent with the empirical evidence. We also find that the impact on GDP of consolidations is lower when consumers have a more limited capacity to borrow, and that increasing government spending in an episode of intense private deleveraging can still generate positive and significant effects on consumption and output, although the fiscal output (employment) multiplier decreases (increases) with the intensity of the credit crunch. In the model with indebted impatient households we also observe that output (employment) multipliers decrease (increase) markedly with the degree of shock persistence and increase with the degree of price stickiness.

Esta investigação tem como objetivo perceber, através da utilização da análise de equações estruturais, se existemdiferenças significativas entre os municípios portugueses que apresentam endividamento líquido per capita elevado e reduzido, no período de 2004 a 2009. Utiliza-se a análise multigrupos, tentando avaliar se a estrutura do modelo estrutural, explicativo do endividamento dos municípios portugueses, é equivalente nos dois grupos. Os resultados permitem-nos concluir, emconformidade com os preceitos das teorias de escolha pública e da ilusão fiscal, que existem diferenças significativas entre os municípios com endividamento líquido per capita elevado e reduzido. Essa diferença evidencia-se fundamentalmente nas trajetórias da "Conjuntura fiscal" e "Conjuntura orçamental" para o "Endividamento".

Evidence indicates the magnitudes of the multiplier effects of expansionary monetary and fiscal policies on output are bigger in the low inflation environment and low economic policy uncertainty regime than in the high inflation regime. The high trend inflation and elevated economic policy uncertainty dampen the multiplier effects of expansionary policies. • Therefore a low inflation and low economic policy uncertainty regime matters in the propagation of the stimulatory effects of expansionary policies on GDP growth.

We study the size of fiscal multipliers in response to a government spending shock under different household leverage conditions in a general equilibrium setting with search and matching frictions. We allow for different levels of household indebtedness by changing the intensive margin of borrowing (loan-to-value ratio), as well as the extensive margin, defined as the number of borrowers over total population. The interaction between the consumption decisions of agents with limited access to credit and the process of wage bargaining and vacancy posting delivers two main results: (a) higher initial leverage makes it more likely to find output multipliers higher than one; and (b) a positive government expenditure shock always produces a positive multiplier for vacancies and employment. The latter result is in sharp contrast with models in which some households do not have access to the financial market (RoT consumers), in which the implied labor market responses to fiscal shocks are inconsistent with the empirical evidence. We also find that the impact on GDP of consolidations is lower when consumers have a more limited capacity to borrow, and that increasing government spending in an episode of intense private deleveraging can still generate positive and significant effects on consumption and output, although the fiscal output (employment) multiplier decreases (increases) with the intensity of the credit crunch. In the model with indebted impatient households we also observe that output (employment) multipliers decrease (increase) markedly with the degree of shock persistence and increase with the degree of price stickiness.

Depuis le declenchement de la crise economique et financiere internationale, la politique budgetaire a connu un vif regain d’interet dans les arenes academiques et dans les debats des policy-makers, aussi bien dans les pays avances que ceux en voie de developpement. Pour un pays en voie de developpement comme le Maroc, l’importance de la politique budgetaire reside dans le potentiel qu’elle offre en matiere de stabilisation du cycle economique et de relance de l’activite en periode de recession. Elle decoule egalement de la complexite de ses interactions avec les autres politiques economiques et sociales quel que soit leur nature, structurelle ou bien conjoncturelle. Toutefois l’efficacite de la politique budgetaire demeure conditionnee par un certain nombre de facteurs, notamment, sa capacite a adopter un comportement contra-cyclique, de gerer de maniere optimale l’arbitrage entre relance de l’activite et soutenabilite de la dette a long terme, ainsi que son aptitude a contribuer a...

Este artigo testa a estabilidade e estima os sinais e as magnitudes dos multiplicadores fiscais no Brasil no período 1999-2012. Para tanto, utiliza a metodologia VAR Estrutural Bayesiano com mudança de regimes Markoviana (MS-SBVAR), que é um procedimento bayesiano de estimação no qual todas as variáveis do modelo são consideradas endógenas e todos os parâmetros e valores dos multiplicadores fiscais podem mudar com alterações no estado da economia. Os resultados mostram estabilidade de todos os multiplicadores ao longo do tempo, uma significativa alteração das variâncias dos resíduos das equações de acordo com o estado da economia, uma alta probabilidade de que o multiplicador fiscal da formação bruta de capital fixo da administração pública (FBCF da APU) seja maior do que 1 e de que o multiplicador da carga tributária líquida (CTL) seja negativo e menor do que 1 em módulo. Há ainda uma probabilidade significativa, embora menor, de que o multiplicador fiscal do consumo da administraç...

This study aims at examining the interactions between three macroeconomic variables, namely: public debt, unemployment and budget deficit. We have assumed that the increase in unemployment is caused by the worsening of the budget deficit and the increase in public debt. To test this hypothesis, we have used a system of simultaneous equations in macroeconomic data from 1990 to 2016 in six countries of the Euro zone countries such as (France, Spain, Portugal, Greece, Ireland and Cyprus) as well as five countries of the MENA countries namely (Tunisia, Algeria, Morocco, Egypt and Jordan). All the variables were found to be stationary based on recent panel unit root tests. On fully applying both static (, FE, and RE) and dynamic (system GMM) panel data approaches, it was found that confirm that the results of the model estimation for the six countries of the Euro zone approve that there is a two-way relationship there is a two-way relationship between unemployment and debt. Similarly, there is a two-way relationship between the budget deficit and unemployment. At another level, we note a unidirectional relationship from budget deficit to public debt. However, for the five countries of the MENA countries we have found a unidirectional relation going from public debt to unemployment, a twin directional relation between deficit and unemployment and a unidirectional relation going from debt to the deficit.

Español

En este trabajo se estiman multiplicadores fiscales para delinear su impacto en un proceso de consolidación fiscal para el caso de Venezuela. La estimación se hizo con base en los enfoques de VAR estructural de Blanchard y Perotti (2002), Favero y Giavazzi (2007) y Estevão y Samake (2013). Los resultados del estudio, que se hizo para el periodo 1976-2013 con frecuencia trimestral, permitieron identificar la existencia de multiplicadores fiscales bajos para Venezuela e inferir que se podría implementar un programa de consolidación fiscal en el país con efectos negativos reducidos sobre la economía en el corto plazo. Estos hallazgos favorecen la evidencia empírica de estimaciones que utilizan técnicas SVAR para el caso de economías emergentes y de bajos ingresos, pero queda abierta la opción para el uso de otras que han encontrado mayores multiplicadores. Se advierte que el trabajo no recoge adecuadamente el aumento importante del gasto público de capital del periodo 2008-2013, y que tampoco controla por la calidad de las políticas públicas y tributarias; factores que deberían identificarse adecuadamente, dada su relevancia en la sostenibilidad en el mediano y largo plazo de los programas de consolidación fiscal.

Palabras clave: Multiplicadores fiscales, VAR estructural, consolidación fiscal.

English

This paper presents the estimation of fiscal multiplier to outline the impact of a process of fiscal consolidation in Venezuela. The estimation is based on the structural VAR approaches of Blanchard & Perotti (2002), Favero & Giavazzi (2007) and Estevão & Samake (2013). The results of the study, carried out for the period 1976-2013 on a quarterly basis, made it possible to identify the existence of low fiscal multipliers for Venezuela and to infer that a fiscal consolidation program could be implemented in the country with moderate negative impact on the economy in the short term. The findings of this study are in line of studies that use SVAR models in the emerging and low-income economies, but the option for the use of other techniques that have found higher multipliers remains open. It should be noted, however, that the work does not adequately reflect the significant increase in public capital expenditure of the 2008-13 period and that it does not control the quality of public and tax policies, factors that properly identified should have a positive impact on the medium and long-term sustainability of fiscal consolidation programs.

Keywords: Fiscal multipliers, structural VAR, fiscal consolidation.

BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. This publication is available on the BIS website (www.bis.org).

Partial insurance of consumption against wage shocks is achieved through progressive taxation, labor supply adjustment, and precautionary wealth accumulation. The optimal degree of progressivity depends on preference and initial wealth conditions. More patient, more willing to work, and less wealthy households prefer more progressivity. The optimal progressivity is similar in Germany in comparison to the United States, though wealth has a greater impact on consumption insurance in Germany.