Fiscal multipliers in Sweden

Fiscal multipliers in Sweden - A quantitative model perspective

Fiscal multipliers for eight different fiscal instruments are calculated using the National Institute of Economic Research's DSGE model SELMA, a model which is parameterized to match the behavior of the Swedish economy. The fiscal multipliers are largely in line with the literature on fiscal multipliers. The government consumption multiplier is close to, but higher
than 1, which is in line with consensus in the empirical literature. Furthermore, it is shown that the conducted monetary policy during and after the fiscal stimulus matter significantly for the resulting multiplier. The use of an empirically reasonable monetary policy rule does however not change the consumption multiplier from the consensus view. In addition, it is shown that using monetary policy accommodation yields a stronger increase in the fiscal multipliers than if the monetary policy rate is at its lower bound.