The aim of this paper is to assess South Africa’s fiscal multiplier across different states of the economy, with a focus on the financial accelerator mechanism of fiscal policy shocks, by estimating impulse response functions from both linear and non...
Despite the frequent use of fiscal policy for stabilization purposes, there remains significant uncertainty regarding the impact of fiscal policy decisions on macroeconomic outcomes. This impact is quantified by calculating fiscal multipliers. A...
Much of the research on the impact of fiscal policy shocks on macroeconomic outcomes (e.g., fiscal multipliers) uses reduced-form modelling approaches such as vector auto-regressions to obtain empirical results. In a recent study1, we used this...
A critical requirement for efficient fiscal policy is a reliable understanding of its impact on the aggregate economy for different policy instruments and under different economic conditions. Indeed, there is strong evidence to suggest that fiscal...
We analyse implications of financial sector dynamics for fiscal expenditure multipliers in recessionary conditions. We employ a stock-and-flow-consistent model for South Africa with four financial instruments and detailed balance sheets for the...
Despite the frequent use of fiscal policy for stabilization purposes and the important role fiscal activism has played over the last decade, the size of budgetary multipliers (i.e. the output response following an exogenous shock to fiscal policy)...
Much of the research on fiscal multipliers has used reduced form modelling approaches. While these models have been extended to include richer controls and identification approaches, it remains unclear whether shocks identified capture the true...
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