Ellahie , Atif and Ricco, Giovanni (2017) Government purchases reloaded : informational insufficiency and heterogeneity in fiscal VARs. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1138).

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Abstract

Using a large Bayesian VAR, we approximate the flow of information received by economic agents to investigate the effects of changes to government purchases. We document robust evidence that informational insufficiency in conventional models explains inconsistent results across samples and commonly employed identifications in recursive Structural VARs and Expectational VARs. Furthermore, we report heterogeneous effects of components of government purchases. While aggregate government purchases do not appear to produce strong stimulative effects with output multiplier around 0.7, government investment components have multipliers well above unity. State and local consumption, which captures investment in education and health, elicits a strong response.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Econometric models, Public investments, Global Financial Crisis, 2008-2009
Series Name:	Warwick economics research papers series (WERPS)
Publisher:	University of Warwick. Department of Economics
Place of Publication:	Coventry
ISSN:	0083-7350
Official Date:	May 2017
Dates:	Date Event May 2017 Published
Number:	1138
Number of Pages:	35
Institution:	University of Warwick
Status:	Not Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Open Access

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