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Multiplier effects of social protection: a SVAR approach for Brazil

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  • Marina Sanches
  • Laura Carvalho

Abstract

Based on Blanchard and Perotti (2002)'s Structural VAR approach, we estimated fiscal multipliers for social benefits in Brazil for 1997-2018. Our results suggest that social benefits have relatively large multiplier effects, even when compared to public investment. The multipliers are also larger in the full sample, which includes the country's 2014-16 economic crisis than in the period 1997-2014. In particular, our results show that spending one unit on social expenditures generates a final change in GDP of almost three after two years. The higher estimated multipliers in the full sample appear in the response of household consumption and private investment to shocks in total social expenditures and for different types of social benefits (e.g., cash transfers, unemployment insurance, and pensions). In a context in which the expansion of social protection became prominent as a response to structural changes in the labor market and the Covid-19 pandemic, our paper reinforces its potential role in the short-run economic recovery.

Suggested Citation

  • Marina Sanches & Laura Carvalho, 2022. "Multiplier effects of social protection: a SVAR approach for Brazil," Working Papers, Department of Economics 2022_17, University of São Paulo (FEA-USP).
  • Handle: RePEc:spa:wpaper:2022wpecon17
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    Cited by:

    1. Julie Ann Q. Basconcillo, 2023. "A nexus between fiscal policy and inflation: a case study of Indonesia using SVAR model," Public Sector Economics, Institute of Public Finance, vol. 47(4), pages 477-503.

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    More about this item

    Keywords

    fiscal multipliers; social benefits; business cycle; social protection: VAR;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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