TITLE:
Fiscal Multipliers in Brazil: A Sensitivity Analysis on the Structural Identification Procedure
AUTHORS:
Gilberto da Silveira Barros, Fernando Motta Correia
KEYWORDS:
Fiscal Policy, SVAR, Fiscal Multipliers, Brazil
JOURNAL NAME:
Modern Economy,
Vol.10 No.10,
October
31,
2019
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.