The macroeconomic effects of fiscal policy in Portugal : a Bayesian SVAR analysis
With a new quarterly dataset we estimate a Bayesian Structural Autoregression model and a Fully Simultaneous System approach to analyze the macroeconomic effects of fiscal policy. Results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to “crowding...
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| Format: | article |
| Language: | eng |
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2018
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| Online Access: | http://hdl.handle.net/10400.5/15656 |
| Country: | Portugal |
| Oai: | oai:www.repository.utl.pt:10400.5/15656 |
| Summary: | With a new quarterly dataset we estimate a Bayesian Structural Autoregression model and a Fully Simultaneous System approach to analyze the macroeconomic effects of fiscal policy. Results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to “crowding-out” effects of private consumption and investment; have a persistent and positive effect on the price level and a mixed impact on the average financing cost of government debt. Explicitly considering the government debt dynamics in the model is also important. A VAR counter- factual exercise confirms that unexpected positive spending shocks create relevant “crowding-out” effects. |
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