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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