Fiscal Multipliers in the ECCU

ByJesus R Gonzalez-Garcia, Antonio Lemus, Mico Mrkaic

May 22, 2013

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The multipliers of taxes, and government consumption and investment expenditure for the Eastern Caribbean Currency Union (ECCU) are estimated using vector autoregression models with panel data. The impact and long-run multipliers are below unity, suggesting that a great extent of the intended impulse ends up expanding imported demand. The long-run multipliers of taxes and consumption expenditure are non-different from zero statistically, while public investment has a long-run multiplier of 0.6. The results suggest that countercyclical policies to stimulate growth should focus on public investment.

Subject: Expenditure, Fiscal multipliers, Fiscal policy, Public investment spending, Revenue administration

Keywords: ECCU, fiscal multiplier, Fiscal Multipliers, Global, government consumption expenditure, government investment expenditure multiplier, investment multiplier, OECS, Panel VAR, Public investment spending, public spending multiplier, time series, WP

Pages:
17
Volume:
2013
DOI:
https://doi.org/10.5089/9781484359914.001
Issue:
117
Series:
Working Paper No. 2013/117
Stock No:
WPIEA2013117
ISBN:
9781484359914
ISSN:
1018-5941

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