Macroeconomic Effects of Fiscal Policies: Empirical Evidence from Bangladesh, People's Republic of China, Indonesia, and Philippines

Date: November 2006
Type: Papers and Briefs
Country:
Subject:
Series: Economics Working Papers
ISSN: 1655-5252 (print)
Author: Ducanes, Geoffrey; Cagas, Marie Anne; Qin, Duo; Quising, Pilipinas F.; Razzaque, Mohammad Abdur

Description

This paper studies the macroeconomic effects of fiscal policies in four Asian countries—Bangladesh, People's Republic of China, Indonesia, and Philippines—by means of structural macroeconometric model simulations. It is found that shortterm fiscal multipliers from an untargeted increase in government expenditure are positive but much less than those from an increased expenditure targeted to capital spending. The multiplier effects from fiscal expansion via a tax rate reduction are found to be typically much less than through higher spending. The effectiveness of automatic stabilizers in general, and more specifically, the effectiveness of expenditure versus tax-side stabilizers, differs across countries.

Contents

  • Abstract
  • Introduction
  • Review of Literature and Methodology
  • Macroeconomic Context
  • Empirical Results
  • Conclusion
  • References