Is Fiscal Policy Alone Enough for Growth ? A Simulation Analysis for Bolivia
AbstractThis paper develops a dynamic stochastic general equilibrium (DSGE) model to analyze the growth effects of fiscal policy in Bolivia. It is a multi-sector model with five representative sectors for the Bolivian economy: Non-tradables, importables, hydrocarbons, mining and agriculture. Public capital is included as a production factor in each of these sectors. The model is calibrated and a number of interesting scenarios are simulated by modifying each of the available fiscal policy instruments. In particular, we analyze the sustainability of Bolivian social policy based on government transfers to households along with the short- and long-run implications of fiscal policy for growth and welfare. We find that fiscal policy alone is unable to generate high rates of growth: it must be accompanied by an efficient provision of public capital and productivity boosts in the economic sectors.
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Bibliographic InfoPaper provided by PEP-MPIA in its series Working Papers MPIA with number 2011-10.
Date of creation: 2011
Date of revision:
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Fiscal policy; Infrastructure; multi-sector growth model;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-11 (All new papers)
- NEP-CMP-2011-06-11 (Computational Economics)
- NEP-DGE-2011-06-11 (Dynamic General Equilibrium)
- NEP-FDG-2011-06-11 (Financial Development & Growth)
- NEP-MAC-2011-06-11 (Macroeconomics)
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