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Fiscal multipliers of central, state and local government and of the social security funds in Germany: Evidence of a SVAR

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  • Hollmayr, Josef
  • Kuckuck, Jan

Abstract

By applying a Structural Vector Autoregressive (SVAR) approach this paper estimates the effects of fiscal policy shocks of different government sub-sectors on aggregate GDP in Germany. From a general government perspective, the results show that besides investment, it is particularly changes in social contributions that yield significant output effects. The GDP response to fiscal policy shocks of the various government sub-sectors turns out to be very heterogeneous. Investment expenditures at all public authorities (central, state and local) trigger positive and statistically significant output effects at least on impact. By contrast, it is only government consumption at state government level and monetary benefits at state government and social security level that induce statistically significant and positive effects on economic activity. Overall, the disaggregated results suggest that besides investment, it is chiefly expenditure with a large share of personnel-related outlays that can have positive effects on aggregate output.

Suggested Citation

  • Hollmayr, Josef & Kuckuck, Jan, 2018. "Fiscal multipliers of central, state and local government and of the social security funds in Germany: Evidence of a SVAR," Discussion Papers 28/2018, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:282018
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    Cited by:

    1. Désirée I. Christofzik & Angela Fuest & Robin Jessen, 2022. "Macroeconomic Effects of the Anticipation and Implementation of Tax Changes in Germany: Evidence from a Narrative Account," Economica, London School of Economics and Political Science, vol. 89(353), pages 62-81, January.
    2. Ibrahim, Omar, 2021. "Measuring the Output Effects of Fiscal Policy in Egypt: A Disaggregated Structural VAR Analysis," MPRA Paper 110962, University Library of Munich, Germany.
    3. Marina da Silva Sanches & Laura Barbosa de Carvalho, 2023. "Multiplier effects of social protection: a SVAR approach for Brazil," International Review of Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 93-112, January.
    4. Dante Cardoso & Laura Carvalho & Gilberto Tadeu Lima & Luiza Nassif-Pires & Fernando Rugitsky & Marina Sanches, 2023. "The Multiplier Effects of Government Expenditures on Social Protection: A Multi-Country Analysis," Working Papers, Department of Economics 2023_11, University of São Paulo (FEA-USP).

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    More about this item

    Keywords

    Fiscal Policy; Multipliers; VAR; Disaggregated Government Levels and Instruments;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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