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On the size of fiscal multipliers: A counterfactual analysis

  • Kuckuck, Jan
  • Westermann, Frank

We point out that fiscal multipliers derived from SVAR-models include the predicted future path of policy instruments. After the initial shock, net taxes and government expenditures react to each other and are autocorrelated. In a counterfactual simulation, we report fiscal multipliers that abstract from these dynamic responses.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 123 (2014)
Issue (Month): 1 ()
Pages: 26-32

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Handle: RePEc:eee:ecolet:v:123:y:2014:i:1:p:26-32
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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