Size and impact of fiscal multipliers: a case study of Thailand

This study aims to determine the size of government spending multiplier in term of budget disbursement and tax multiplier in term of tax revenue, in the case of Thailand. The analytical framework utilizes the Structural Vector Autoregressions (SVARs) in the seminal paper of Blanchard and Perotti (2002) with time-series dataset of government spending, tax revenue, and gross domestic product (GDP), during 2005Q4 – 2022Q4, all in nominal terms. The findings point out that the impacts of the fiscal shocks, government expenditure and tax revenue, on the output remain in accord with the basic wisdom that an increase in spending has a positive effect on the economy while raising tax revenue has a negative outcome, respectively. However, the estimation of accumulated response of output due to the fiscal movement indicates that the magnitude of output in response to tax revenue shock is noticeably larger than the spending shock as the time passes by. According to the outcome, the fiscal policy should take into account the time-delay procedure and implication lags since the effectiveness of fiscal measure could vary across characteristics of the institutional perceptions as well as the other kinds of exogenous factors.