Fiscal Multipliers in the ECCU
IMF Working Papers, May 22, 2013
Source details
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- Fiscal Multipliers in the ECCU
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Bibliographic details
- Authors: Jesus R Gonzalez-Garcia, Antonio Lemus, Mico Mrkaic
- Published: May 22, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484359914.001
Research question and methodology
- Objective: Estimate the multipliers of taxes, and government consumption and investment expenditure for the Eastern Caribbean Currency Union (ECCU).
- Method: Vector autoregression models with panel data (Panel VAR).
Key findings
- Impact and long-run multipliers are below unity.
- 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.
- Public investment has a long-run multiplier of 0.6.
Policy implications and recommendations
- Countercyclical policies to stimulate growth should focus on public investment.
Additional notes from the source text
- The study’s conclusion emphasizes limited domestic demand response to fiscal impulses from taxes and government consumption, with public investment showing materially larger long-run effects (long-run multiplier = 0.6).
Source: Fiscal Multipliers in the ECCU, IMF Working Paper by Jesus R Gonzalez-Garcia, Antonio Lemus, and Mico Mrkaic (May 22, 2013).