Fiscal Multipliers in the ECCU

18 Pages Posted: 18 Jun 2013

See all articles by Jesus Gonzalez-Garcia

Jesus Gonzalez-Garcia

International Monetary Fund (IMF)

Antonio Lemus

affiliation not provided to SSRN

Mico Mrkaic

International Monetary Fund (IMF)

Date Written: May 2013

Abstract

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.

Keywords: Fiscal policy, Caribbean, Eastern Caribbean Currency Union, Economic models, Government expenditures, Fiscal Multipliers, Panel VAR, OECS, ECCU., fiscal variables, tax revenues, tax revenue, fiscal policies, fiscal shocks, fiscal variable, public spending, government expenditure, public expenditure, government spending, tax multiplier, fiscal impulse, aggregate demand, government revenue, tax cuts, tax collection, expenditure on investment, expansionary fiscal, tax reductions, public finance, expenditure programs, public debt, tax increase, fiscal affairs department, taxation, fiscal stimulus, public expenditures, expansionary fiscal policies, debt service, fiscal affairs, public finances

JEL Classification: E62, C30

Suggested Citation

Gonzalez-Garcia, Jesus and Lemus, Antonio and Mrkaic, Mico, Fiscal Multipliers in the ECCU (May 2013). IMF Working Paper No. 13/117. Available at SSRN: https://ssrn.com/abstract=2280625

Jesus Gonzalez-Garcia (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Room: HQ2 10A-572
Washington, DC 20431
United States
(202) 6236310 (Phone)
(202) 6236159 (Fax)

Antonio Lemus

affiliation not provided to SSRN ( email )

No Address Available

Mico Mrkaic

International Monetary Fund (IMF) ( email )

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

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