Fiscal Multipliers in Chile

Jorge Fornero, Juan Guerra-Salas and Camilo Pérez N.

Journal Economía Chilena (The Chilean Economy), 22 (1), April 2019, 58-80.

Published version (PDF)

Abstract:

We estimate the government spending multiplier for aggregate government expenditure and three of its components: government consumption, transfer payments, and public investment. We find that aggregate expenditure has a multiplier close to unity, while government consumption and public investment have multipliers of about 2. The multiplier for transfer payments is less than 1. These results are based on structural vector autoregressive models (SVARs). We also find that from 2009 onwards, shocks to government expenditure are countercyclical.