No. 141. FISCAL MULTIPLIERS IN EURO AREA PERIPHERAL COUNTRIES: EMPIRICAL EVIDENCE FROM A STRUCTURAL VAR MODEL

Published in DISCUSSION PAPERS

S. Papaioannou. 2015.

 

DP 141 exof 200x294This paper studies the effects of fiscal policy on GDP across highly indebted countries of the Euro area periphery. By estimating a structural VAR econometric model for Cyprus, Greece, Ireland, Italy, Portugal and Spain during 1995:Q1-2013:Q3, this study shows that the output responses are not uniform following a fiscal shock. The magnitude of the cumulative multiplier after a government spending shock is very high in Cyprus, Greece and Italy. In most countries the output response after a shock in net taxes is negative or close to zero.


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