Fiskální multiplikátory v ČR
| Title in English | Fiscal Multipliers in the Czech Republic |
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| Authors | |
| Year of publication | 2025 |
| Type | Special-purpose publication |
| MU Faculty or unit | |
| Citation | |
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| Description | A fiscal multiplier expresses by how much gross domestic product (GDP) changes when the government increases its spending by one Koruna. It is a key indicator because it allows us to estimate how effective government interventions in the economy will be. If the multiplier is high, it means that each additional unit of government expenditure triggers a stronger increase in economic activity – which is especially important during a recession. Conversely, a low multiplier suggests that government spending has a limited impact, for example due to household savings, leakages into imports, or the crowding-out of private investment. This study estimates government spending fiscal multipliers for the Czech Republic over the period 1999 Q1 – 2024 Q3 using a wide range of VAR, FAVAR, and local projection models. Excluding the Covid-19 period, the average one-year multiplier reaches 0.61 and the two-year multiplier 0.89. However, when the Covid-19 pandemic period is included, the multipliers rise to 0.98 (one-year) and 1.26 (two-year). This indicates significantly higher effectiveness of government spending during this crisis, underlining the importance of active economic policy in times of extraordinary shocks. State-dependent estimates show a pronounced cyclical variation: in expansion, the annual multiplier in the baseline scenario is 0.31, while in recession it is 0.78; the two-year multiplier then reaches 0.82 vs. 1.73. The results are sensitive to (i) the granularity of expenditure and tax composition, (ii) the construction of the slack variable, (iii) the identification scheme, (iv) the choice of price deflator, and to some extent also (v) the specific econometric specification. Despite substantial uncertainty, the findings confirm that government spending in the Czech economy generally has a positive and cyclically asymmetric effect, which is stronger during periods of economic downturn and exceptional crises. |
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