How large are fiscal multipliers in Turkey?

Using the augmented version of the Blanchard-Perotti's SVAR model, this article seeks to estimate the size of fiscal multipliers in Turkey for the period 2002:q3-2016:q2. Unlike many previous papers that use aggregate data in estimating the size of the fiscal multiplier, we use disaggregated data on taxes and government spending for the same purposes. Our empirical findings indicate that the size of the short-run fiscal multipliers for taxes much differs from that of government spending. Depending on the disaggregated tax and government spending instruments, it ranges from −0.83 to −0.27 for taxes, and from 0.02 to 0.98 for government spending, respectively. Overall, these findings corroborate the idea that a shock to taxes produces a non-Keynesian effect on GDP whereas government spending creates a (weak) Keynesian effect.