Fiscal policy, redistribution and business strategy: a structural economics approach

What the paper says

Purpose This study quantifies the sectoral and distributional effects of fiscal spending in Chile using a Social Accounting Matrix (SAM) multiplier framework. The aim is to trace how fiscal injections propagate across productive sectors and household income groups, identifying structural sensitivities of the economy and deriving actionable implications for fiscal design and strategic planning in policy-sensitive markets. Design/methodology/approach Using a Chilean SAM (2017), the analysis estimates output, income and employment multipliers across 12 productive sectors and five household income quintiles. The model captures intersectoral linkages and feedback mechanisms between production, factor incomes and household expenditures. Sensitivity tests assess robustness to plausible perturbations in technical coefficients and household marginal propensities to consume. Findings Construction, manufacturing and trade generate the largest output and employment multipliers, while fiscal injections are disproportionately captured by higher-income households. Backward linkages produce only moderate redistribution, suggesting that inclusive fiscal policy requires prioritizing labor-intensive sectors with stronger connections to low-income groups and higher local expenditure pass-through. Research limitations/implications Results are static and depend on the 2017 SAM structure; dynamic adjustments and behavioral responses are beyond the model and constitute avenues for future research. Practical implications The framework can inform fiscal program design, sectoral prioritization and administrative planning, while also helping firms anticipate demand shifts and market opportunities arising from redistributive spending in interconnected economic environments. Originality/value Rather than introducing a novel econometric technique, this paper contributes by integrating SAM-based structural analysis with fiscal policy evaluation and translating macro-structural results into an operational decision-support tool for managers and public administrators. The framework links redistribution, demand formation and sectoral opportunity structures, supporting both policy implementation and strategic market planning.