Government Spending Multiplier in Turkey

Government Spending Multiplier in Turkey

Title:

Government Spending Multiplier in Turkey

Number:

15/15

Author(s):

Cem Çebi

Language:

English

Date:

June 2015

Abstract:

This study aims to measure the size of the government spending multiplier in Turkey for post-2001 financial crisis period within a structural VAR framework. The analysis demonstrates that a positive shock to government spending tends to increase output, tax, real interest rate on impact and the size of the fiscal multiplier is relatively large at first few quarters. The fiscal multiplier reaches a peak value of 1.5 at second quarter and then starts to diminish. Furthermore, investigating the effects of the components of government spending reveals the fact that government investment expenditures, rather than consumption expenditures, have a profound impact on output at first few quarters. However, there is no evidence that multiplier effect of government investment higher than government consumption at the end of the first year. 

Keywords:

Government spending multiplier, SVAR

JEL Codes:

E62; H30

Government Spending Multiplier in Turkey
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