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É consensual que questões políticas acarretam impactos econômicos significativos, entretanto, saber a direção e magnitude destes não é trivial. A contribuição desta dissertação ao assunto se divide em duas frentes: verificação da existência de ciclo político-orçamentário na execução de investimentos públicos; e estimação de relações macroeconômicas ao longo do ciclo político. Para o primeiro ponto, utilizou-se um modelo estrutural para a série mensal de investimento das Administrações Públicas (níveis federal, estadual e municipal), encontrando ciclos de curto e médio prazo, com duração de, aproximadamente, 2 e 4 anos, respectivamente. Ademais, os ciclos coincidem com o calendário eleitoral, sendo que suas fases de expansão se encontram no período pré-eleitoral e as de contração, sempre em anos ímpares. Para o segundo ponto, um VAR linear e outro com mudança de regime foram estimados, incorporando neste as informações obtidas pelo Modelo Estrutural. Os resultados do modelo linear indicam que investimento público causa crowding-out sobre investimento privado e que tanto investimento público quanto privado exercem efeito positivo sobre o PIB, a magnitude do segundo, entretanto, é consideravelmente superior à do primeiro. O modelo não-linear evidencia que os multiplicadores fiscais são distintos para os períodos pré e pós-eleitoral, salientando que o ajuste fiscal não implica redução da atividade econômica, e sim o contrário. O impacto dos investimentos privados sobre o crescimento, por sua vez, é sempre alto, positivo e independente de ciclo político. / There is consensus that political issues carry significant economic impact, however, it\'s not trivial to determine the direction and magnitude of these ones. The contribution of this thesis to the subject is divided into two fronts: the determination of political budget cycle in the execution of public investments; and estimation of macroeconomic relationships over the political cycle. For the first point, we used a structural model for the general government (federal, state and municipal levels) monthly series of investment, finding short and medium term cycles, with duration of, approximately, 2 and 4 years, respectively. Furthermore, the cycles coincide with the electoral calendar, since phases of expansion are in the pre-election period and the contraction ones, always in odd years. For the second point, a linear and a regime switching VAR were estimated, incorporating in the latter information obtained by the Structural Model. The results of the linear model indicate that public investment causes crowding-out in private investment and that public and private investment has a positive effect on the GDP, the magnitude of the second, however, is considerably higher than the first. The nonlinear model shows that fiscal multipliers are distinct for the pre and post-election period, stressing that the fiscal adjustment does not imply reduction of the economic activity, but otherwise. On the other hand, the impact of private investment on economic growth is always high, positive and independent of the political cycle.

We generalize a simple New Keynesian model and show that a flattening of the Phillips curve reduces the size of fiscal multipliers at the zero lower bound (ZLB) on the nominal interest rate. The factors behind the flatting are consistent with micro- and macroeconomic empirical evidence: it is a result of, not a higher level of price rigidity, but an increase in the degree of strategic complementarity in price-setting -- invoked by the assumption of a specific instead of an economy-wide labour market, and decreasing instead of constant-returns-to-scale. In normal times, the efficacy of fiscal policy and resulting multipliers tends to be small because negative wealth effects crowd out consumption, and because monetary policy endogenously reacts to fiscally-driven increases in inflation and output by raising rates, offsetting part of the stimulus. In times of a binding ZLB and a fixed nominal rate, an increase in (expected) inflation instead lowers the real rate, leading to larger fiscal multipliers. Conditional on being in a ZLB-environment, under a flatter Phillips curve, increases in expected inflation are lower, so that fiscal multipliers at the ZLB tend to be lower. Finally, we also discuss the role of solution methods in determining the size of fiscal multipliers. / Series: Department of Economics Working Paper Series

É consensual que questões políticas acarretam impactos econômicos significativos, entretanto, saber a direção e magnitude destes não é trivial. A contribuição desta dissertação ao assunto se divide em duas frentes: verificação da existência de ciclo político-orçamentário na execução de investimentos públicos; e estimação de relações macroeconômicas ao longo do ciclo político. Para o primeiro ponto, utilizou-se um modelo estrutural para a série mensal de investimento das Administrações Públicas (níveis federal, estadual e municipal), encontrando ciclos de curto e médio prazo, com duração de, aproximadamente, 2 e 4 anos, respectivamente. Ademais, os ciclos coincidem com o calendário eleitoral, sendo que suas fases de expansão se encontram no período pré-eleitoral e as de contração, sempre em anos ímpares. Para o segundo ponto, um VAR linear e outro com mudança de regime foram estimados, incorporando neste as informações obtidas pelo Modelo Estrutural. Os resultados do modelo linear indicam que investimento público causa crowding-out sobre investimento privado e que tanto investimento público quanto privado exercem efeito positivo sobre o PIB, a magnitude do segundo, entretanto, é consideravelmente superior à do primeiro. O modelo não-linear evidencia que os multiplicadores fiscais são distintos para os períodos pré e pós-eleitoral, salientando que o ajuste fiscal não implica redução da atividade econômica, e sim o contrário. O impacto dos investimentos privados sobre o crescimento, por sua vez, é sempre alto, positivo e independente de ciclo político. / There is consensus that political issues carry significant economic impact, however, it\'s not trivial to determine the direction and magnitude of these ones. The contribution of this thesis to the subject is divided into two fronts: the determination of political budget cycle in the execution of public investments; and estimation of macroeconomic relationships over the political cycle. For the first point, we used a structural model for the general government (federal, state and municipal levels) monthly series of investment, finding short and medium term cycles, with duration of, approximately, 2 and 4 years, respectively. Furthermore, the cycles coincide with the electoral calendar, since phases of expansion are in the pre-election period and the contraction ones, always in odd years. For the second point, a linear and a regime switching VAR were estimated, incorporating in the latter information obtained by the Structural Model. The results of the linear model indicate that public investment causes crowding-out in private investment and that public and private investment has a positive effect on the GDP, the magnitude of the second, however, is considerably higher than the first. The nonlinear model shows that fiscal multipliers are distinct for the pre and post-election period, stressing that the fiscal adjustment does not imply reduction of the economic activity, but otherwise. On the other hand, the impact of private investment on economic growth is always high, positive and independent of the political cycle.

O objetivo deste trabalho é investigar se os multiplicadores de gastos do governo diferem de acordo com o estado do ciclo de negócios para o período 1999: I- 2016: II. Para tanto é utilizado o Método de Projeção Local de Jordà para estimar as funções resposta ao impulso e os multiplicadores fiscais sob dois regimes diferentes: recessão e expansão. Para definir os diferentes regimes foram utilizadas as variáveis comumente usadas na literatura (o hiato do produto, o nível de utilização da capacidade instalada, a taxa de crescimento do PIB, a taxa de desemprego), além da datação oficial de ciclos do CODACE. A estimação do modelo não linear resulta em multiplicadores de gastos do governo, após um e dois anos, maiores nos períodos de recessão do que nos períodos de expansão, independentemente da variável escolhida para diferenciar os regimes. Porém, os multiplicadores obtidos não parecem ser diferentes estatisticamente entre os regimes. Infelizmente, como observado por Ramey e Zubairy (2017) a existência de séries históricas é fundamental para a estimação dos multiplicadores fiscais e sua ausência para a economia brasileira limita muito o que é possível dizer sobre o assunto / This paper aims to investigate whether government spending multipliers are different according to the state of the business cycle for the Brazilian economy during the period 1999:I-2016:II. In order to do so we use Jordà\'s Local Projection Method to estimate impulse response functions and fiscal multipliers under two different regimes: recession and expansion. To define the different regimes we use several variables commonly used in the literature: the output gap, the capacity utilization level, the GDP growth rate, the unemployment rate and CODACE. The nonlinear model estimations result in larger multipliers, after one and two years, in periods of economic recession than in periods of economic expansion, regardless of the variable chosen to differentiate regimes. However, the multipliers do not seem to be statistically different between regimes. Unfortunately, as observed by Ramey and Zubairy (2017), long historical series are fundamental for the adequate estimation of fiscal multipliers and their absence for the Brazilian economy does not allow anyone to say much about the subject.

[pt] Esse artigo investiga se a fragilidade fiscal influencia a magnitude dos multiplicadores fiscais. Nós definimos estados de fragilidade fiscal baseados na literatura de determinantes político-institucionais de déficits fiscais. Utilizando dados trimestrais para 44 países, encontramos evidências de que os multiplicadores fiscais de economias em situação fiscal frágil são menores do que os multiplicadores dos países com maior fluxo esperado de geração de superávits. / [en] This paper investigates if fiscal fragility influences the magnitude of fiscal multipliers. We define states of fiscal fragility based on the literature on politico-institutional determinants of fiscal deficits. Using quarterly data for 44 countries, we find that fiscal multipliers in fiscally fragile economies are smaller than in economies expected to have greater surpluses.

O objetivo deste trabalho é investigar se os multiplicadores de gastos do governo diferem de acordo com o estado do ciclo de negócios para o período 1999: I- 2016: II. Para tanto é utilizado o Método de Projeção Local de Jordà para estimar as funções resposta ao impulso e os multiplicadores fiscais sob dois regimes diferentes: recessão e expansão. Para definir os diferentes regimes foram utilizadas as variáveis comumente usadas na literatura (o hiato do produto, o nível de utilização da capacidade instalada, a taxa de crescimento do PIB, a taxa de desemprego), além da datação oficial de ciclos do CODACE. A estimação do modelo não linear resulta em multiplicadores de gastos do governo, após um e dois anos, maiores nos períodos de recessão do que nos períodos de expansão, independentemente da variável escolhida para diferenciar os regimes. Porém, os multiplicadores obtidos não parecem ser diferentes estatisticamente entre os regimes. Infelizmente, como observado por Ramey e Zubairy (2017) a existência de séries históricas é fundamental para a estimação dos multiplicadores fiscais e sua ausência para a economia brasileira limita muito o que é possível dizer sobre o assunto / This paper aims to investigate whether government spending multipliers are different according to the state of the business cycle for the Brazilian economy during the period 1999:I-2016:II. In order to do so we use Jordà\'s Local Projection Method to estimate impulse response functions and fiscal multipliers under two different regimes: recession and expansion. To define the different regimes we use several variables commonly used in the literature: the output gap, the capacity utilization level, the GDP growth rate, the unemployment rate and CODACE. The nonlinear model estimations result in larger multipliers, after one and two years, in periods of economic recession than in periods of economic expansion, regardless of the variable chosen to differentiate regimes. However, the multipliers do not seem to be statistically different between regimes. Unfortunately, as observed by Ramey and Zubairy (2017), long historical series are fundamental for the adequate estimation of fiscal multipliers and their absence for the Brazilian economy does not allow anyone to say much about the subject.

Submitted by Rodrigo Abreu (rodrigo.fea@hotmail.com) on 2012-12-19T16:46:04Z No. of bitstreams: 1 Fiscal_Multipliers_final_19122012.pdf: 610827 bytes, checksum: 9524182b559dc768fd1e52b1b19e872b (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-01-18T17:10:51Z (GMT) No. of bitstreams: 1 Fiscal_Multipliers_final_19122012.pdf: 610827 bytes, checksum: 9524182b559dc768fd1e52b1b19e872b (MD5) / Made available in DSpace on 2013-01-18T17:11:15Z (GMT). No. of bitstreams: 1 Fiscal_Multipliers_final_19122012.pdf: 610827 bytes, checksum: 9524182b559dc768fd1e52b1b19e872b (MD5) Previous issue date: 2012-09-19 / This paper studies the behavior of fiscal multipliers in two different economic environments: complete markets and incomplete markets. Based on steady state analysis, output multipliers are found within a range between 0.49 and 0.66, when the markets are complete. Under incomplete markets, output multiplier was found in an interval between 0.75 and 0.94. These results indicates that the market structure, which reflects the degree of risk sharing and the intensity of the precautionary motive faced by individuals, plays a key role in determining the fiscal multipliers. In the second part of the paper, was performed an exercise to analyze the dynamic response of macroeconomic aggregates to an exogenous and unexpected rise in government spending financed by lump-sum taxes. In this case, impact output multipliers varies in a range between 0.64 and 0.68, under complete markets, and within 1.05 and 1.20 when markets are incomplete. The results found under incomplete markets are very close to that found on related literature which usually uses an econometric approach or calibrated/estimated New Keynesian models. These results shows that taking into account the deficiencies in the insurance mechanisms can be an interesting way to reconcile theoretical models with the results found on related current literature, without the need of ad-hoc assumptions relative to price stickness. / Este artigo estuda o comportamento dos multiplicadores fiscais em dois ambientes Econômicos distintos: mercados completos e incompletos. Com base na análise do estado estacionário de ambas economias, são encontrados multiplicadores do produto em um intervalo entre 0:49 e 0:66, quando os mercados são completos. Quando os mercados são incompletos, o multiplicador do produto encontrado ficou em um intervalo entre 0:75 e 0:94. Estes resultados indicam que a estrutura de mercado, que reflete o nível de compartilhamento de risco e o grau do motivo precaucionário enfrentado pelos indivíduos, desempenha um papel fundamental na determinação dos multiplicadores fiscais. Na segunda parte do artigo, foi realizado exercício para analisar a resposta dinâmica dos agregados macroeconômicos em relação a um aumento exógeno e inesperado dos gastos do governo financiado por meio de impostos lump-sum. Neste caso, os multiplicadores de impacto sobre o produto ficaram entre 0:64 e 0:68, quando os mercados são completos, e entre 1:05 e 1:20 quando os mercados são incompletos. Os resultados obtidos _a partir da análise dinâmica sob mercados incompletos ficaram bastante próximos daqueles encontrados na literatura relacionada, que geralmente obtém multiplicadores dessa magnitude usando uma abordagem econométrica ou por meio de modelos Novo Keynesianos. Estes resultados mostram que levar em consideração as deficiências nos mecanismos de seguro podem ser uma forma interessante de reconciliar os modelos teóricos com os resultados encontrados na literatura relacionada, sem a necessidade de adotar hipóteses ad-hoc sobre a estrutura da rigidez de preços.

Thesis deals with a fiscal policy issue with emphasis on the debt crisis. First specifics of the data capture of the government sector for the purpose of evaluating the fiscal position are analyzed. It includes assessment of the fiscal sustainability indicators and the historical reaction function of fiscal policy in the EU. The analysis of cyclical adjustment of the government balance, definition of fiscal impulse and the estimation of fiscal multipliers in the Czech Republic precedes the contribution to the debate regarding the optimal fiscal policy setup with respect to debt sustainability in the long run and sufficient degree of flexibility in the short run. The thesis concludes with the identification of the causes of the fiscal debt crises with the subsequent analysis of possible ways to resolve the already existing fiscal imbalances and assessing the appropriateness of the Czech government's consolidation.

<p>  </p> <p>This dissertation is composed of three independent chapters in the field of the economic geography and international trade. However, there is one uniting theme between all three chapters: geographic spillovers. In each chapter, a source of geographic spillovers that is relevant to policymakers is investigated. Further, each chapter addresses a theoretical or data-driven challenge to identifying these spillovers and implements an improved methodology for estimation. In particular, the first chapter studies agglomeration and congestion spillovers, the impact of employment density on the productivity of workers and the amenities associated with living in a location, respectively, by using variation from a natural experiment. The second chapter studies fiscal multipliers, the effect of government spending on economic activity, by using variation from the same natural experiment. Finally, the third chapter studies import spillovers, the impact of neighboring firms' experience sourcing from foreign markets on the likelihood that firms in the same location and industry enter into those same markets, by using detailed data on Serbian firms.</p> <p><br></p> <p>In the first chapter, <em>Agglomeration and Congestion Spillovers: Evidence from Base Realignment and Closure</em>, I quantify agglomeration and congestion spillovers using variation from a natural experiment by instrumenting for changes in local employment with proposed changes to civilian employment at military installations through the Base Realignment and Closure (BRAC) process. I find an agglomeration spillover elasticity consistent with the existing literature. However, my estimate of the congestion spillover elasticity is smaller in magnitude than common parameterizations of quantitative economic geography models. All else equal, with a weaker congestion spillover elasticity, more of the distribution of economic activity across space is due to natural advantages and disadvantages. This result implies smaller gains from implementing the optimal spatial policy. </p> <p><br></p> <p>In the second chapter, <em>Local Fiscal Multipliers and Defense Spending</em>, I estimate county-level fiscal multipliers using shocks to military employment to instrument for local defense spending. Aggregate shocks to military employment are subject to the Base Realignment and Closure process, which is designed to isolate the recommendations of the Department of Defense from political influences. By exploiting variation in military employment, I address the endogeneity of government spending when using changes in defense spending to estimate fiscal multipliers. In addition, this method addresses the attenuation bias due to geographic measurement error that results from using data on military contracts alone with small geographic units. This extends the common method for estimating state- and national-level fiscal multipliers using variation in defense spending to more local geographic units. My estimates imply a local income multiplier between 0.5 and 0.8, which is smaller than existing estimates that use non-defense-based sources of variation, but larger than the existing estimates based on variation in defense contract spending. </p> <p><br></p> <p>In the third chapter, <em>International Sourcing and Firm Learning: Evidence from Serbian Firms</em>, we find that compared to non-importers, importers are more productive and pay higher wages as they source better quality and cheaper production inputs. However, little is known about how these firms learn about their sourcing markets. We quantify the impact of neighboring firms' importing experience on the decision to start sourcing inputs from new markets using merged customs and administrative data from Serbian firms. We find that firms are more likely to start importing from a new market if firms in the same industry and location have imported from that market and if those firms increased their imports over time. Further, our results support a distinction between imports and exports for the decision to enter foreign markets; unlike exports, import sourcing choices are not independent across countries, but are substitutes. We also investigate origin-country and firm heterogeneity. Our results indicate that the impact of neighboring firms' importing experience is greater for source countries in the European Union market and for firms that are high productivity, foreign owned, and previous importers. Together, these findings suggest that a firm's spatial connections are an important factor in its access to global markets as sources for inputs.</p>