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Measuring the Output Effects of Fiscal Policy in Egypt: A Disaggregated Structural VAR Analysis.

Ibrahim, Omar (2021): Measuring the Output Effects of Fiscal Policy in Egypt: A Disaggregated Structural VAR Analysis.

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Abstract

This research aims to quantify the effects of fiscal policy on output in Egypt by applying a Structural Vector Autoregressive analysis on quarterly time-series from 2007/8 Q1 to 2019/20 Q4. The research investigates the channels of transmission of fiscal policy by disaggregating the SVAR to analyse the effects of changes in taxation and government spending on economic growth. Results consistently show positive effects on output resulting from government spending shocks, and negative effects resulting from taxation shocks. Public investments and consumption are seen to crowd in private investments with a lag while public consumption crowds out private consumption. Taxation is seen to crowd out private investments and consumption. Overall, the results are in line with the neoclassical theory.

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