HOW FISCAL SPACE MATTERS? EVIDENCE ON FISCAL MULTIPLIERS FROM THRESHOLD SVAR METHODOLOGY

• Authors: Kamenik Martin , Stiblarova Lubica
• Languages of publication: EN

Abstracts

EN

In this paper, we alternatively apply a threshold SVAR methodology to measure fiscal multipliers in selected world’s economies with regard to the size of the fiscal space defined by a proxy variable of primary balance, which may be substantially linked to the ability of the fiscal policy instruments to affect the output. The results suggest that positive and negative shocks do not necessarily result in symmetric response of variables as smaller fiscal multipliers (i.e., less effective fiscal policies) are observed when economies show weaker fiscal position. Thus, expansionary fiscal policy in times of narrow fiscal space dampens expansionary effects on real economic activity. At the same time, we find considerably lower revenue than spending multipliers, confirming Keynesian theory (except for France).

Keywords

EN

FISCAL MULTIPLIER; GOVERNMENT SPENDING; THRESHOLD SVAR MODEL; FISCAL SHOCK

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2021
• Volume: 69
• Issue: 4
• Pages: 335 – 358

Contributors

author

Kamenik Martin

• Technical University of Košice, Faculty of Economics, Department of Economic Theories, Němcovej 32, 040 01 Košice, Slovak Republic

author

Stiblarova Lubica

Identifiers

DOI

https://doi.org/10.31577/ekoncas.2021.04.01