The size of fiscal multipliers and the stance of monetary policy in developing economies

Arbeitspapier

In this paper we estimate the effect of government consumption shocks on GDP using a panel of 21 developing economies. Our goal is to better understand the reasons for the low fiscal multipliers found in the literature by performing estimations for alternative exchange rate regimes, business-cycle phases, and monetary policy stances. In addition, we perform counterfactual simulations to analyze the possible gains from fiscal-monetary policy coordination. The results imply that government consumption shocks are usually followed by monetary policy tightening in developing economies with flexible regimes. Our simulations show that this reaction partially explains the presence of low fiscal multipliers in these economies. On the other hand, we find that government consumption shocks imply higher multipliers in developing economies during fixed regimes, economic booms or monetary expansions. In particular, implementing fiscal programs during monetary expansions seems to improve significantly their economic stimulus.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 106

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Fiscal Policy ; Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy ; Current Account Adjustment; Short-term Capital Movements
• Thema: Fiscal Policy ; Monetary Policy ; Structural Vector Autoregression ; Exchange Rate Regime ; Panel VAR

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ojeda-Joya, Jair N. ; Guzman, Oscar E.
• Ereignis: Veröffentlichung
• (wer): Osnabrück University, Institute of Empirical Economic Research
• (wo): Osnabrück
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/184706
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ