Estimating the Fiscal Multiplier in Argentina

17 Pages Posted: 20 Apr 2016

See all articles by Paloma Anos Casero

Paloma Anos Casero

World Bank

Diego Cerdeiro

International Monetary Fund (IMF)

Riccardo Trezzi

Board of Governors of the Federal Reserve System

Date Written: February 1, 2010

Abstract

Argentina's government has resorted to fiscal policy as a countercyclical tool to mitigate the negative impact of the current economic downturn on aggregate demand. Empirical results based on a vector error correction model suggest, however, that the fiscal multiplier is relatively small and short-lived. This could reflect a number of factors, including the higher propensity of households to save during the economic downturn, the implementation lag of public expenditures, particularly of capital expenditures, and the narrow tax base that limits the impact of countercyclical revenue measures on domestic demand.

Keywords: Debt Markets, Fiscal Adjustment, Economic Stabilization, Economic Theory & Research, Emerging Markets

Suggested Citation

Anos Casero, Paloma and Cerdeiro, Diego and Trezzi, Riccardo, Estimating the Fiscal Multiplier in Argentina (February 1, 2010). World Bank Policy Research Working Paper No. 5220, Available at SSRN: https://ssrn.com/abstract=1565981

Paloma Anos Casero (Contact Author)

World Bank ( email )

1818 H Street
Washington, DC Washington 20433
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2024371780 (Phone)

Diego Cerdeiro

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Riccardo Trezzi

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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