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Government Spending Multiplier in Turkey

Author

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  • Cem Cebi

Abstract

This study aims to measure the size of the government spending multiplier in Turkey for post-2001 financial crisis period within a structural VAR framework. The analysis demonstrates that a positive shock to government spending tends to increase output, tax, real interest rate on impact and the size of the fiscal multiplier is relatively large at first few quarters. The fiscal multiplier reaches a peak value of 1.5 at second quarter and then starts to diminish. Furthermore, investigating the effects of the components of government spending reveals the fact that government investment expenditures, rather than consumption expenditures, have a profound impact on output at first few quarters. However, there is no evidence that multiplier effect of government investment higher than government consumption at the end of the first year.

Suggested Citation

  • Cem Cebi, 2015. "Government Spending Multiplier in Turkey," Working Papers 1515, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1515
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2015/15-15
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    Cited by:

    1. Ianc, Nicolae-Bogdan & Turcu, Camelia, 2020. "So alike, yet so different: Comparing fiscal multipliers across EU members and candidates," Economic Modelling, Elsevier, vol. 93(C), pages 278-298.
    2. Şen, Hüseyin & Kaya, Ayşe, 2015. "Growth enhancing effect of discretionary fiscal policy shocks: Keynesian, Weak Keynesian or Non-Keynesian?," MPRA Paper 65976, University Library of Munich, Germany, revised 05 Aug 2015.
    3. Nicolae-Bogdan Ianc & Camelia Turcu, 2019. "So alike, yet so different: comparing fiscal multipliers across E(M)U candidates," Working Papers 2019.03, International Network for Economic Research - INFER.

    More about this item

    Keywords

    Government spending multiplier; SVAR;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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