## Fiscal Multipliers in Bulgaria: Low But Still Relevant

_IMF Working Papers, February 25, 2013_

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## Bibliographic details
- Authors: Dirk V Muir, Anke Weber
- Published: February 25, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475560473.001

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### Study scope and methods
- Quantifies the short-term impact of fiscal policy on economic activity in Bulgaria using econometric and model-based approaches.
- Context: fiscal adjustment proceeding quickly in Bulgaria amid a weak economic growth environment.
- Economy characterized as a small open emerging economy.

### Key findings on fiscal multipliers and transmission
- Fiscal multipliers have been modest in the past.
- The effect on output is not independent of the speed of adjustment and the specific consolidation measures used.
- The impact of fiscal policy on economic activity is larger in downturns than in expansions.
- Capital spending and direct taxes are associated with the largest effects on output.
- Non-targeted government transfers and indirect taxes are associated with a smaller impact on output.
- Results suggest that increased capital spending financed by higher indirect tax revenue collections through base broadening has sizeable growth effects over the medium and long-term.

### Policy implications and recommendations
- Prioritize composition of fiscal adjustment to be more growth friendly given weak growth and fast consolidation.
- Consider increasing capital spending to enhance medium- and long-term growth effects.
- Finance higher capital spending via indirect tax revenue collections through base broadening to achieve sizeable growth effects.
- Account for the business cycle when designing fiscal measures, as multipliers are larger in downturns.

### Publication and metadata
- Authors: Dirk V Muir, Miss Anke Weber
- Date: February 25, 2013
- IMF Working Papers, Working Paper No. 2013/049
- Pages: 19
- DOI: https://doi.org/10.5089/9781475560473.001

*Source: IMF Working Paper No. 2013/049, Dirk V Muir and Miss Anke Weber, "Fiscal Multipliers in Bulgaria: Low But Still Relevant", February 25, 2013.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-multipliers-in-bulgaria-low-but-still-relevant-40342_