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Fiscal Multipliers in Brazil: A Sensitivity Analysis on the Structural Identification Procedure

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DOI: 10.4236/me.2019.1010137    108 Downloads   225 Views

ABSTRACT

The present study measured the effectiveness of Brazilian fiscal policy (the effects of fiscal shocks on output) through several specifications of SVAR models. The focus was on the impact of tax shocks on output, but spending shocks effects were also estimated. Two databases for fiscal variables were used: the official data from National Treasury and a set of alternative data by Gobetti and Orair [1]. The tax multiplier depends on the assumption about the sensitivity of government’s revenue to output: the greater the sensitivity, the greater is the tax multiplier. The preferred estimates of tax multipliers in this paper are higher than other estimates in the Brazilian literature. In most identifications both spending and tax (impact) multipliers are below unit.

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da Silveira Barros, G. and Correia, F. (2019) Fiscal Multipliers in Brazil: A Sensitivity Analysis on the Structural Identification Procedure. Modern Economy, 10, 2175-2200. doi: 10.4236/me.2019.1010137.

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