RBI Working Paper Series - 7 - Size of Government Expenditure Multipliers in India: A Structural VAR Analysis - ಆರ್ಬಿಐ - Reserve Bank of India
RBI Working Paper Series - 7 - Size of Government Expenditure Multipliers in India: A Structural VAR Analysis
The Reserve Bank today placed on its website a Working Paper titled “Size of Government Expenditure Multipliers in India: A Structural VAR Analysis”. The paper has been authored by Dr. Rajeev Jain and Shri Prabhat Kumar. In the recent years, active fiscal policy has been used across countries to mitigate the negative macroeconomic shocks generated by the global financial crisis in credit markets and banking systems. This, in turn, led to a considerable discussion among policy makers and researchers regarding the potential effectiveness of fiscal policy as a stabilisation tool. In case of India as well, the Central government undertook three stimulus packages during December 2008 - March 2009. Thus, it is important to estimate the size of expenditure multipliers as it not only reflects upon the quality and effectiveness of fiscal policy but also assumes importance when there is a need for undertaking a credible fiscal consolidation. Against this background, a study “Size of Government Expenditure Multipliers in India: A Structural VAR Analysis” was undertaken which estimated the size of expenditure multiplier at the level of Central and the State governments, using annual data for the period from 1980-81 to 2011-12. The structural vector autoregression framework was used to gauge the effects of various categories of government expenditure on India’s GDP. The major findings of the paper are:
The Reserve Bank of India introduced the RBI Working Papers series in March 2011. These papers present research in progress of the staff members of the Reserve Bank and are disseminated to elicit comments and further debate. The views expressed in these papers are those of authors and not those of the Reserve Bank of India. Comments and observations may kindly be forwarded to authors. Citation and use of such papers should take into account its provisional character. Alpana Killawala Press Release : 2013-2014/592 |