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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/2539

Title: The Macroeconomic Effects of Fiscal Policy in Portugal: a Bayesian SVAR Analysis
Authors: Afonso, António
Sousa, Ricardo M.
Keywords: B-SVAR
fiscal policy
debt dynamics
Portugal
Issue Date: 2009
Publisher: ISEG – Departamento de Economia
Citation: Afonso, António e Ricardo M. Sousa. 2009. "The Macroeconomic Effects of Fiscal Policy in Portugal: a Bayesian SVAR Analysis". Instituto Superior de Economia e Gestão - DE Working papers nº 9-2009/DE/UECE
Series/Report no.: DE Working papers;nº 9-2009/DE/UECE
Abstract: In the last twenty years Portugal struggled to keep public finances under control, notably in containing primary spending. We use a new quarterly dataset covering 1979:1-2007:4, and estimate a Bayesian Structural Autoregression model to analyze the macroeconomic effects of fiscal policy. The results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to important "crowding-out" effects, by impacting negatively on private consumption and investment; and have a persistent and positive effect on the price level and the average cost of financing government debt. Positive government revenue shocks tend to have a negative impact on GDP; and lead to a fall in the price level. The evidence also shows the importance of explicitly considering the government debt dynamics in the model. Finally, a VAR counter-factual exercise confirms that unexpected positive government spending shocks lead to important "crowding-out" effects.
URI: http://hdl.handle.net/10400.5/2539
ISSN: 0874-4548
Publisher version: http://aquila2.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=94471
Appears in Collections:UECE - Documentos de Trabalho / UECE - Working Papers
DE - Documentos de trabalho / Working Papers

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