Macroeconomic effects of fiscal policy in the European Union, with particular reference to transition countries

Kabashi, Rilind

doi:10.3326/pse.41.1.7

Cited by 8 publications

(9 citation statements)

References 31 publications

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“…on the other hand, increased interest rates lower asset values and have a negative wealth effect to discourage private consumption. Our estimates are consistent with the estimates documented by (Alichi et al, 2019; Corsetti et al, 2012; Furceri & Li, 2017; Ilzetzki et al, 2013; Kabashi, 2017; Koh, 2016).…”

Section: Resultssupporting

confidence: 93%

“…The fiscal multipliers for high‐debt countries and low‐debt countries are estimated separately. To examine the effect of debt burden on the multiplier size, we split the sample into high‐debt countries and low‐debt countries, based on a 60 % of public debt to GDP ratio following the prominent papers of (Ilzetzki et al, 2013; Kabashi, 2017; Koh, 2016). The output response to a discretionary fiscal spending shock varies with countries' debt burden.…”

Section: Resultsmentioning

confidence: 99%

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Fiscal multipliers and structural economic characteristics: Evidence from countries in sub‐Saharan Africa

Woldu

Izabella

2023

World Economy

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Output response to discretionary fiscal policy is a key aspect of examining various theories, findings of empirical studies and delivering guidance to policymakers. This study analyses the output response to unanticipated fiscal spending shocks under several structural economic characteristic factors, including business cycle states, debt burden, openness of the economy, exchange rate regimes and political governance regime, using annual data from 40 countries in SSA spanning from 2000 to 2019 in a panel threshold vector auto‐regression model. The findings indicate that fiscal spending multipliers have much larger effects on output in times of recession, in economies operating under lower trade openness, a fixed exchange rate, low‐debt burden, restricted capital mobility, less financial development and a democratic governance regime. Based on the results, the discretionary countercyclical fiscal policy and optimal fiscal policy action are recommended. Moreover, in order to have effective fiscal policy must target hand‐to‐mouth consumers (non‐Ricardian consumers) and firms with limited liquidity, concentrating on social services and social protection to increase short‐term demand. Likewise, A proper fiscal monetary policy mix should be considered with other structural measures to maximising the positive effects of the fiscal expansion.

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Section: Resultssupporting

confidence: 93%

Section: Resultsmentioning

confidence: 99%

Fiscal multipliers and structural economic characteristics: Evidence from countries in sub‐Saharan Africa

Woldu

Izabella

2023

World Economy

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“…Our choice of variables is underpinned by the theoretical proposition underlying the study published by the IMF in 2015 (Clements et al, 2015), wherein they observe that taxes, as well as spending decisions such as social security, education and health expenditures, are designed not only to directly impact on households' welfare, but also on the income distribution. Therefore, and similarly to the approach of Kabashi (2015), we also replace the public spending variable with three social expenditure variables, one at a time: social protection spending (SPS it ), health spending (HS it ), and education spending (ES it ). Moreover, in examining the impact of the spending shocks on different income groups, we replace the Gini index with three percentile income shares representing three different income groups: the 10th percentile represents the low-income group; the 50th percentile denotes the middle-income group and the 90th percentile the high-income group.…”

Section: Model Specificationmentioning

confidence: 99%

Fiscal Policy and Inequality in Middle- and High-Income Countries: Redistributive Effects of Tax and Spending Shocks

Isiaka

Mihailov

Razzu

2023

Preprint

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Motivated by the sharp increases in public spending following the global financial crisis and the COVID-19 pandemic, we employ the GMM Panel VAR approach at annual frequency between 2004-2014 to investigate the response of alternative income distribution variables to shocks imposed on tax revenues and three key components of social expenditures: social protection, health and education. We confirm the potential of fiscal policy to reduce income inequality, but point to the differential approaches to do so in middle-and high-income countries. We find that the particular expenditure component under consideration matters in terms of the impact on inequality and on different parts of the income distribution, as well as in terms of the implied time profile. In middle-income countries, positive education spending shocks are the most effective in achieving better distributional outcomes. By contrast, in high-income countries, positive health spending and tax shocks have a more pronounced favourable distributional impact. JEL codes: E62, H53, O15

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“…We identify the fiscal shocks in the smallest VAR possible, as argued by Fatás and Mihov (2001) and Kabashi (2017). Figures A1 and A2 in the Appendix plot the impulse responses of the government expenditure and revenue shock using only five variables excluding private consumption and investment.…”

Section: Robustness Checkmentioning

confidence: 99%

The effects of fiscal policy shocks in Bangladesh: An agnostic identification procedure

Rahaman

Leon-Gonzalez

2021

Economic Analysis and Policy

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Macroeconomic effects of fiscal policy in the European Union, with particular reference to transition countries

Cited by 8 publications

References 31 publications

Fiscal multipliers and structural economic characteristics: Evidence from countries in sub‐Saharan Africa

Fiscal multipliers and structural economic characteristics: Evidence from countries in sub‐Saharan Africa

Fiscal Policy and Inequality in Middle- and High-Income Countries: Redistributive Effects of Tax and Spending Shocks

The effects of fiscal policy shocks in Bangladesh: An agnostic identification procedure

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