The Effects of Fiscal Policy Shocks in Morocco: An SVAR Approach
By : Firdawss Tahri – Mohamed Karim
Abstract
Interest in assessing the effects of fiscal policy shocks on macroeconomic variables, especially on GDP, has surged in recent years, since it was expected to reestablish the economic balance after the recent recession. The majority of empirical studies estimate the impact of fiscal policy on economic activity using vector autoregressive (VAR) models.
This paper analyzes the effect of fiscal shocks on economic activity by applying the structural VAR methodology proposed by Blanchard and Perotty (2002) to Moroccan data. The empirical findings are consistent with other studies related to emerging economies. This assessment reveals a positive impact of expansionary fiscal policy on economic activity. However, the fiscal multipliers are found to be very small, meaning that the economic activity is not significantly influenced by fiscal policy shocks.
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