Fiscal Multiplier in Microstates: Evidence from the Caribbean |
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Authors: | Kester Guy Anton Belgrave |
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Institution: | (1) Central Bank of Barbados, Bridgetown, Barbados |
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Abstract: | The global financial crisis and the attendant Great Recession of 2007–2009 have spawned a full-scale re-examination on the
effectiveness of fiscal policy throughout the world. While this has led to a plethora of analyses in developed countries,
the same abundance of the work has not been evident for developing counties. This paper uses time-series analysis to examine
the multiplier impact of fiscal policy on growth and other macroeconomic variables in the case of four Caribbean states. Although
these countries have similar degrees of openness, they differ in debt burdens and economic structures, thus providing a natural
laboratory for this investigation. We concluded that fiscal multipliers among the sample countries are quite low and that
the contemporaneous fiscal stance appears to be pro-cyclical. |
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