Output effects of fiscal stimulus in Central and Eastern European countries

Combes, Jean-Louis; Minea, Alexandru; Mustea, Lavinia Teodora; Yogo, Thierry

doi:10.1080/14631377.2015.1124559

Cited by 20 publications

(6 citation statements)

References 37 publications

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“…Rather contradictory results occur in the case of trade openness, where the direct effect of additional government consumption is higher in more open economies though is less persistent at the same time. These findings are in line with those in Koh (2017) but contradict those in Ilzetzki et al (2013), Combes et al (2016), and Hory (2016). As at least partly expected, we discovered Notes: +/ -represents positive or negative impact of the country's characteristic on the size of fiscal multiplier, respectively.…”

Section: Discussionsupporting

confidence: 88%

Estimation of Government Spending Multiplier in EU Economies

Senekovič

Kavkler

Bekő

2019

Naše Gospodarstvo/Our Economy

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The aim of this paper is to estimate government consumption multiplier and to examine the effect of various characteristics of countries on the size of fiscal multiplier. We apply a panel VAR model following Ilzetzki et al. (2013) for a sample of 28 EU countries covering the period from 1995 to 2017. Key findings are, first, the estimated average fiscal multiplier is larger than unity. Second, the size of fiscal multiplier is larger in the cases of lower public indebtedness, for more developed European countries and for more financially open economies, which is also in line with relevant empirical literature. Regarding the role of trade openness, the results are inconclusive. In addition to this, membership of countries in the European integrations positively affects the size of fiscal multiplier. Therefore, fiscal policymakers should use fiscal stimuli as the instrument of boosting short-term economic growth selectively and consider country-specific characteristics. This paper contributes to the ongoing discussion in two ways, it examines the effect of additional characteristics of countries on the size of fiscal multiplier and updates existing empirical literature.

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Section: Discussionsupporting

confidence: 88%

Estimation of Government Spending Multiplier in EU Economies

Senekovič

Kavkler

Bekő

2019

Naše Gospodarstvo/Our Economy

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“…The same type of behaviour regarding public spending was found for Croatia (Deskar-Škrbić & Šimović, 2017), for the Czech Republic (Franta, 2012;Snudden & Klyuev, 2011), and for Poland (Haug et al, 2013;Laski et al, 2010;Mirdala, 2009), while for Romania and Bulgaria the effects are found to be weak (Boiciuc & Orțan, 2020;Mirdala, 2009;Muir & Weber, 2013). Combes et al (2016) highlight the small, but positive, effect of government expenditure on output, with different magnitudes for the CEE countries. The effect on output of government expenditure shocks is negative for the Czech Republic (Franta, 2012;Snudden & Klyuev, 2011), Croatia and Slovenia (Deskar-Škrbić & Šimović, 2017), and has a positive effect in Bulgaria, Hungary, and Romania (Mirdala, 2009).…”

Section: Literature Reviewsupporting

confidence: 52%

The asymmetric effects of fiscal policy on inflation and economic activity in post-communist European countries

Asandului

Lupu

Maha

et al. 2021

Post-Communist Economies

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Fiscal policy plays an important role in stimulating economic activity, but it also has a significant influence in securing monetary stability in an economy. Our study aims to analyse the asymmetric effects of fiscal policy on inflation and economic activity on twelve post-communist European countries that are associated with the European Union (EU) by either membership or by being members of the Eastern European Partnership (EaP). We explore the asymmetric effects on inflation and economic activity by using a Pooled Mean Group (PMG) estimator. The results show that in the long run, the fiscal policy instrument negatively influences both inflation and economic activity; in the short run, the effects are not significant. A Nonlinear Autoregressive Distributed Lag (NARDL) model was estimated individually for each country. Our main findings are that the cumulative impact of fiscal policy generates an inflationary growth effect for the EU countries in our sample.

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“…Analyzing the Eurozone countries as a whole (including the newest EMU members), Cugnasca and Rother (2015) confirm that, over 2004-2013, fiscal adjustments had strong effects (23% of fiscal adjustments had a multiplier larger than one). Nevertheless, focusing on some of the EMU recent members, in particular, Combes et al (2016) find, using a panel vector error correction model, that the spending multiplier is positive, but low, on average, over the time span 1999-2013, varying across countries. Baum et al (2012) and Batini et al (2014) note that short-term tax multipliers are weak in the Eurozone.…”

Section: Fiscal Multipliers By Country-groupmentioning

confidence: 86%

“…Compared to annual data, quarterly data 7 allow to better capture fiscal shocks and GDP reactiveness (Ilzetzki et al 2013). Moreover, quarterly data, with respect to annual data, bring in a considerable increase in the number of degrees of freedom (Combes et al 2016): this becomes crucial if the time span under analysis is not very large, as in our case.…”

Section: Datamentioning

confidence: 97%

“…The EMU candidates need to prepare their future monetary integration and also need to maintain sound public finances, in order to make the fulfilment of the Maastricht criteria possible at some point in the future. Nevertheless, aiming to have higher fiscal revenues through raising taxes might generate a GDP increase only in the short run (Combes et al 2016).…”

Section: Comparing Fiscal Multipliers Across Eu Candidates and Eu Membersmentioning

confidence: 99%

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So alike, yet so different: Comparing fiscal multipliers across EU members and candidates

Ianc

Turcu

2020

Economic Modelling

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We estimate, using a Panel Vector Autoregressive approach and data from 2001Q1 to 2017Q1, the fiscal multipliers of the European Union (EU) members and candidates. These countries are grouped according to their stages of integration: original members, new Eurozone members, and candidates for the Eurozone and the EU itself. For each group, we assess the impact of a positive spending shock (expansionary) or a positive tax shock (contractionary) on GDP. Our findings suggest that: (i) rising government spending increases GDP in both the EU and Eurozone candidates (Keynesian multipliers), but slightly decreases it in the Eurozone members (non-Keynesian multipliers); (ii) higher taxes are associated with mixed results in terms of GDP dynamics -both increases and decreases in terms of GDP are found -in the four country groups (suggesting the presence of Keynesian and non-Keynesian multipliers). Overall, these outcomes indicate that spending multipliers are, compared to tax multipliers, more sensitive to European Union or Eurozone membership.

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Output effects of fiscal stimulus in Central and Eastern European countries

Cited by 20 publications

References 37 publications

Estimation of Government Spending Multiplier in EU Economies

Estimation of Government Spending Multiplier in EU Economies

The asymmetric effects of fiscal policy on inflation and economic activity in post-communist European countries

So alike, yet so different: Comparing fiscal multipliers across EU members and candidates

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