Production structure, tradability and fiscal spending multipliers

Arbeitspapier

We assess the role that nontradable goods play as a determinant of fiscal spending multipliers, making use of a two-sector model. While fiscal multipliers increase with the share of nontradable goods, an inverted U-shaped relationship exists between multiplier size and the import share. Employing an interacted panel VAR model for EU countries, we estimate the effect of the share of nontradable goods on fiscal spending multipliers. Our empirical results provide strong evidence for the predictions of the theoretical model. They imply that the drag of fiscal consolidations is on average smaller in countries with a low share of nontradable goods.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIFO Working Papers ; No. 664

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Production ; Fiscal Policy ; Open Economy Macroeconomics ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: Fiscal spending multiplier ; Nontradable goods ; Openness ; DSGE model ; Interacted panel VAR model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Crespo Cuaresma, Jesús ; Glocker, Christian
• Event: Veröffentlichung
• (who): Austrian Institute of Economic Research (WIFO)
• (where): Vienna
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/278598
• Last update: 10.03.2025, 11:41 AM CET