Confidence and the transmission of government expenditure shocks: the case of Portugal

• Autor(a) principal: Varela, Ana Cristina dos Reis Mendes
• Data de Publicação: 2017
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/22246
• topic: Consumer and business confidence; Government expenditure; Output; Portugal; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This thesis investigates the confidence channel through which shifts in government expenditure can affect the Portuguese economic activity, using a linear structural Vector Autoregressive model from 1995 to 2016. The impulse responses are constructed to analyze the impact of government spending measures on output, in a model where confidence is not included, to isolate the direct effect of government expenditure on output, and in a model with confidence, to account for an indirect effect through confidence. Overall, the findings suggest that neither consumer confidence nor business confidence play a crucial role in the propagation of public spending shocks into output.