Fiscal Multipliers in Dynare

General DSGE Modeling
1

Hi,

I am estimating a DSGE model for my country and pretty much interested in finding the government and tax multpliers. I am using Dynare (executed through MATLAB) for the first time. I hae done everyting put in the codes, intial conditions and the model is running well with no errors. My challenge is now when i want to put in different expenditure shocks and revenue shocks in the model and compute multipliers. I dot know how i get get tables for multipliers. I am just getting IRFs. is there a way of changing the IRFs to tables and not figures? or how do i get multipliers so i know how much output (Y) changes when i reduce consumption tax by say 1%

I will appreciate any help.

Regards

2

If you set up your model correctly, then you can read off the multiplier correctly. You need two things:

  1. You need to measure output in percent.
  2. You need to set the shock size of the fiscal instrument to 1 unit of output.

In that case, the IRF of output will be the dollar change in output for 1 dollar of fiscal spending.

3

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Dear Prof jpfeifer,

I think i set the the size of the shock line you are recommending and i get the above irfs whn i shocked govement consumption (Cg). What would i say is the size of my Cg on output (Y) in these irfs.

Thank you

4

That depends on whether you are interested in impact, peak or cumulative multipliers.