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The effects of fiscal policy shocks on macroeconomic variables in developing countries : A meta-analysis of the DSGE literature

  • Stabilization of the economy through fiscal policies has been a broadly discussed subject over many decades. It gained momentum again after the 2008 global recession and is of utmost interest with regard to the COVID-19 crisis. The purpose of this paper is to examine the effects of fiscal policy on output and inflation. The data used to conduct the meta-analysis consist of empirical and calibrated fiscal impulse values of Dynamic Stochastic General Equilibrium studies and databases. An increase in fiscal policy shock by one percent leads to a one-period rise in output and inflation by 0.104 and 0.03 percent. Studies that employ the Bayesian method deliver higher effect. The interaction of fiscal impulse and interest jointly affect the output. Fiscal policy intervention in investment has more effect on growth than inflation-friendly government consumption. This study would help policy makers design stabilization strategies, and researchers to further investigate the subject matter and reconcile the contradictory conclusions of previous studies.

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Document Type:Article
Author:Adem FetoORCiD, M.K. JayamohanORCiD, Arnis VilksORCiD
Chairs and Professorships:Chair of Microeconomics
Parent Title (English):African Journal of Business & Economic Research : AJBER
Year of Completion:2021
First Page:9
Last Page:28
Tag:DSGE model; Developing countries; FIV; Fiscal policy; Meta-analysis
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:SJR Ranking / Q4
Licence (German):License LogoUrheberrechtlich gesch├╝tzt