On the Macroeconomic Impact of Fiscal Policy in Germany – Preliminary Results of a SVAR Approach

Abstract

Mohr investigates the impact of fiscal policy in Germany using a structural vector autoregressive (SVAR) model including four series: GDP, private consumption, government receipts and government expenditures. The author identifies independent revenue and expenditure shocks using a set of restrictions similar to those already employed in previous studies but still requiring, in the opinion of the author, a full theoretical and empirical validation. The results of the analysis concerning the responses of GDP and consumption tend to support standard presumptions. In particular, they indicate that a positive shock to expenditure increases GDP and private consumption, whereas a positive shock to revenue reduces them. In both cases, the impact on GDP reaches a maximum after about two years.