standard calibrated TANK model is able to match key empirical regularities shown in Section 2 in terms of the size, main macroeconomic variables involved, and temporal pro...le of the STM for both the developed and Latin American samples. Section 6 o¤ers some ...nal thoughts.

# 2 Empirical evidence on the Social Transfer Multipliers

Social transfers comprise both ongoing social protection programs and emergency policy responses.<sup>8</sup> Ongoing social protection programs refer to the disbursement of government funds to individuals who meet certain eligibility criteria. The main categories include unemployment bene...ts (transfers to unemployed individuals), family programs (transfers essentially to the poor and most vulnerable households), and pensions (mainly transfers to individuals after retirement). Social transfers represent a large component of government spending comprising more than 50 percent of primary government spending in developed countries and about 40 percent in emerging markets. By and large, the largest category of social transfers spending is pensions (accounting, on average, for more than 75 percent of social transfers), followed by family programs (about 20 percent, on average). Interestingly, in contrast to the emerging world’s long history of social protection in terms of social security and the most recent wave of family programs, unemployment insurance programs are rare in emerging countries (they simply do not exist or, if they do, they have negligible coverage). In terms of their short-term ‡uctuating nature, unemployment insurance spending is, by design, countercyclical (even at the quarterly frequency!).<sup>9</sup> On the other hand, pensions and family programs spending tend to be more rigid and slow-moving in nature and are mainly driven by demographic and structural deep-rooted social problems, respectively.<sup>10</sup> This section estimates STMs using unbalanced quarterly data for the period 1960:Q1 through 2019:Q4 for six Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) and 17 developed countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, United Kingdom, and United States).<sup>11</sup>

## 2.1 Methodology and identi...cation strategy

We use the well-known Blanchard and Perotti (2002) identi...cation strategy that imposes timing restrictions by assuming that while government spending changes are allowed to contemporaneously a¤ect economic activity (i.e., within the quarter), it takes the government at least one quarter to

> 8 This paragraph signi...cantly relies on Galeano et al. (2021). See their paper for a detailed discussion of social transfers basic trends, composition, rigidity, and business cyclical aspects of social transfers.

> 9 In fact, the contemporaneous correlation between quarterly changes of real GDP and real unemployment insurance spending is -0.23 (statistically signi...cant). Pennings (2020) also provide some similar evidence for the United States.

> 10 In fact, the contemporaneous correlation between quarterly changes of real GDP and real pensions and family programs spending is 0.09 (statistically not signi...cant).

> 11 See Appendix 1 for description of data de...nitions, sources, and time coverage for each country.

6