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Efectos macroeconómicos de la política fiscal: Evidencia empírica para Bolivia
[Macroeconomic effects of fiscal policy: Empirical evidence from Bolivia]

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  • Cernadas, Luis

Abstract

Using a Structural Vector Autoregression approach (SVAR), the paper estimates the response of output, price levels, private investment and consumption to expansive and contractive fiscal shocks. The results show that government spending shocks have a positive effect on GDP. On the other hand, a tax increase has a negative effect on the output, through the contraction of consumption and private investment. By disaggregating government spending on consumption and investment, shows that growth in the short run would be motivated by increases in government consumption and public investment. However, in the long run public investment is the fiscal factor with greatest impact on economic growth. Finally, we find that after an increase in public spending, private investment reacts negatively (empirical evidence of a crowding-out effect). Also, higher spending volumes derived in permanent increases in the price level.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39696.

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Date of creation: 2010
Date of revision: 2011
Handle: RePEc:pra:mprapa:39696

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Related research

Keywords: Fiscal Policy; Structural VAR; Public Expenditure; Bolivia;

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References

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  1. Ethan Ilzetzki & Enrique G. Mendoza & Carlos A. Végh, 2010. "How Big (Small?) are Fiscal Multipliers?," CEP Discussion Papers dp1016, Centre for Economic Performance, LSE.
  2. Andrew Mountford & Harald Uhlig, 2005. "What are the Effects of Fiscal Policy Shocks?," SFB 649 Discussion Papers SFB649DP2005-039, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  3. Wendy Edelberg & Martin Eichenbaum & Jonas D.M. Fisher, 1998. "Understanding the Effects of a Shock to Government Purchases," NBER Working Papers 6737, National Bureau of Economic Research, Inc.
  4. Jordi Galí & J. David López-Salido, 2003. "Understanding the Effects of Government Spending on Consumption," Working Papers 73, Barcelona Graduate School of Economics.
  5. Baxter, Marianne & King, Robert G, 1993. "Fiscal Policy in General Equilibrium," American Economic Review, American Economic Association, vol. 83(3), pages 315-34, June.
  6. Olivier Blanchard & Roberto Perotti, 1999. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," NBER Working Papers 7269, National Bureau of Economic Research, Inc.
  7. Perotti, Roberto & Alesina, Alberto, 1997. "The Welfare State and Competitiveness," Scholarly Articles 4553027, Harvard University Department of Economics.
  8. Ignacio Lozano & Karen Rodríguez, . "Assessing the Macroeconomic Effects of Fiscal Policy in Colombia," Borradores de Economia 552, Banco de la Republica de Colombia.
  9. Rodrigo Cerda & Luis Felipe Lagos & Hermann González, 2005. "Efectos Dinámicos de la Política Fiscal," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 42(125), pages 63-77.
  10. Roberto Perotti, 1999. "Fiscal Policy In Good Times And Bad," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1399-1436, November.
  11. Ant�nio Afonso & Ricardo M. Sousa, 2012. "The macroeconomic effects of fiscal policy," Applied Economics, Taylor & Francis Journals, vol. 44(34), pages 4439-4454, December.
  12. Alberto Alesina & Roberto Perotti, 1994. "The Welfare State and Competitiveness," NBER Working Papers 4810, National Bureau of Economic Research, Inc.
  13. Burnside, Craig & Eichenbaum, Martin & Fisher, Jonas D. M., 2004. "Fiscal shocks and their consequences," Journal of Economic Theory, Elsevier, vol. 115(1), pages 89-117, March.
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