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Estimates of Fiscal Multipliers using MEDSEA

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  • Noel Rapa

    (Central Bank of Malta)

Abstract

This paper documents the fiscal extension to MEDSEA, the Central Bank of Malta DSGE model. The model contains a relatively rich fiscal sector. Decisions made by the agents in the model are affected by distortionary taxes on labour income, capital income and consumption. On the expenditure side, the model distinguishes between public sector expenditure on final goods and services, public investment, public employment as well as transfers to households. The model is used to assess the size of fiscal multipliers in a very open and small open economy such as Malta. Both transitory and permanent shocks are considered. It also allows for changes in the instrument used to finance the change in fiscal policy.

Suggested Citation

  • Noel Rapa, 2017. "Estimates of Fiscal Multipliers using MEDSEA," CBM Working Papers WP/04/2017, Central Bank of Malta.
  • Handle: RePEc:mlt:wpaper:0417
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    File URL: https://www.centralbankmalta.org/file.aspx?f=61717
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    References listed on IDEAS

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    6. Patrick Fève & Julien Matheron & Jean-Guillaume Sahuc, 2011. "A Pitfall with DSGE–Based, Estimated, Government Spending Multipliers," 2011 Meeting Papers 136, Society for Economic Dynamics.
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    11. Noel Rapa, 2016. "MEDSEA : a small open economy DSGE model for Malta," CBM Working Papers WP/05/2016, Central Bank of Malta.
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    18. Owen Grech & Noel Rapa, 2016. "STREAM: A structural macro-econometric model of the Maltese economy," CBM Working Papers WP/01/2016, Central Bank of Malta.
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    Cited by:

    1. William Gatt & Noel Rapa & Luca Brugnolini, 2020. "MEDSEA-FIN A DSGE model of the Maltese economy with housing and financial frictions," CBM Working Papers WP/04/2020, Central Bank of Malta.
    2. Noel Rapa & Abigail Marie Rapa, "undated". "The macroeconomic effects of closing the public sector capital gap in Malta," CBM Policy Papers PP/07/2019, Central Bank of Malta.
    3. Noel Rapa, 2020. "A Sectoral Model Extension to STREAM," CBM Working Papers WP/08/2020, Central Bank of Malta.
    4. Pablo Garcia Sanchez & Alban Moura, 2019. "The LU-EAGLE model with disaggregated public expenditure," BCL working papers 135, Central Bank of Luxembourg.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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