Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/190055
Authors: 
Makrelov, Konstantin
Arndt, Channing
Davies, Robert H.
Harris, Laurence
Year of Publication: 
2018
Series/Report no.: 
WIDER Working Paper 2018/6
Abstract: 
We analyse implications of financial sector dynamics for fiscal expenditure multipliers in recessionary conditions. We employ a stock-and-flow-consistent model for South Africa with four financial instruments and detailed balance sheets for the household, government, financial, non-financial, and foreign sectors, and the Reserve Bank. The increase in government expenditure positively affects the probability of default, valuations, and perceptions of risk. Higher inflows of foreign savings can increase the multiplier further by reducing the domestic savings constraint. The size of the fiscal multipliers is also dependent on the actions of domestic and foreign monetary authorities, thus emphasizing the importance of policy co-ordination.
Subjects: 
stock-and-flow consistent
financial dynamics
fiscal multipliers
South Africa
JEL: 
C68
D53
D58
E44
E62
ISBN: 
978-92-9256-448-3
Document Type: 
Working Paper
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