Public Policies Influence on Fiscal Deficit in the EU-28: Common Correlated Effects Approach

Josifidis, Kosta; Dragutinovic, Radmila; Glavaški, Olgica; Supic, Novica

doi:10.7866/hpe-rpe.18.4.3

Cited by 3 publications

(3 citation statements)

References 35 publications

(50 reference statements)

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“…Although the sample covers a longer period of time and preparation phase for membership, the majority of the analyzed economies became members of the EU in 2004 (2004 for the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, 2007 for Bulgaria and Romania and 2013 for Croatia). Crosssection dependence is therefore expected, since the institutional design of the EU includes the common market, common agricultural policy, customs union, tax harmonization and finally monetary union for some of the emerging EU economies, which inevitably leads to connections, spill-over effects and dependencies between EU countries [51].…”

Section: Pooled Mean Group Vs Mean Group Estimator Resultsmentioning

confidence: 99%

Coordination vs. Competitiveness of Effective Average Tax Rates in Relation to FDI: The Case of Emerging EU Economies

et al. 2022

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Due to the single market within the European Union (EU), capital mobility has created many challenges in the field of tax policy, especially whether taxes should be coordinated or governments should retain fiscal sovereignty for the sake of tax competitiveness. In order to attract foreign direct investment (FDI), emerging EU economies most often choose the policy of tax reduction and particularly lowering the effective average tax rates (EATR). The purpose of this paper is to empirically assess the impact of changes in the EATR on the decision to localize FDI in emerging EU economies in the period 1998–2021, in the framework of cross-sectional dependent, non-stationary, heterogeneous panels. Using the (Pooled) Mean Group estimator, the long-run relationship between the EATR and the FDI is revealed. The error-correction parameters are significant and heterogeneous, showing that the speed of adjustments towards equilibrium is different, but the highest in Estonia. Accession to the EU contributed faster adjustments to the long-run relationship in the majority of the emerging EU economies, while a broader set of potential determinants of FDI localization is taken into consideration and estimated using the Panel-corrected standard error method. Results showed de facto tax competitiveness in the group of emerging EU economies, instead of de jure tax coordination in the EU.

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Section: Pooled Mean Group Vs Mean Group Estimator Resultsmentioning

confidence: 99%

Coordination vs. Competitiveness of Effective Average Tax Rates in Relation to FDI: The Case of Emerging EU Economies

et al. 2022

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“…Author concluded that weak sustainability exists in the analyzed sample and emphasised advantages of methods for heterogeneous panel estimation. Josifidis et al (2018) as well emphasise the importance of heterogeneity in the sample of European Union economies, namely, the study provides evidence of heterogeneous effects of different public policies on fiscal sustainability in EU-28. On the other hand, Ehrhart and Llorca (2008) showed fiscal sustainability in six South-Mediterranean countries, while Campeanu and Andreea (2010) analyzed fiscal sustainability and fiscal reactions in Central and Eastern European countries, distinguishing economies which fiscal adjustments could improve the ability to run a primary surplus, from economies with opposite responses.…”

Section: Literature Reviewmentioning

confidence: 85%

Fiscal Adjustments in the European Union versus West Balkans economies: Evidence from Heterogeneous Panels

Glavaški,

Beker Pucar

2020

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This paper empirically assesses heterogeneity of fiscal adjustments in the European Union and West Balkans economies, in the circumstances when debt crisis renewed the questions when and how governments adjust their public expenditure. The research covers sample of 28 European Union economies and 5 West Balkans economies over the period 1995-2018. The results based on PMG panel model point to weak fiscal sustainability with significant fiscal adjustments, in average, 28.18 % of deviations from equilibrium relationship are corrected in one year. Moreover, the results provide heterogeneous evidence of fiscal adjustments of public expenditure to long-run equilibrium relationship in European Union and West Balkans economies. Implications of the results for the West Balkans economies are that accession process to European Union means improvements in public finances of candidates and potential candidate economies, in the context of achieving weak fiscal sustainability. However, accession process does not lead to automatic convergence of economies and fiscal sustainability assessment, although significant fiscal adjustments are noted.

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“…Both the CS-ARDL and CCEMG estimators are equally efficient to produce reliable estimates in the presence of endogeneity, heterogeneity, and cross-sectional dependence. The representation of the CCEMG model according to Azam and Haseeb (2021), Josifidis et al (2018) is:…”

Section: Robustness Checks and Further Analysismentioning

confidence: 99%

Global Outward Foreign Direct Investment and Economic Growth Across Income Groups: The Mediating Effect of Home Country Institutions

Osabuohien-Irabor

Drapkin

2023

Sage Open

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Although some empirical studies have examined the direct impact of outward foreign direct investment (outward FDI) on economic growth, but the indirect role play by home country institutions in outward FDI-induced economic growth remain unexplored. To cover this research gap, this study examines the impact of outward FDI on economic growth mediated by home country institutions in global panel of 161 economies, divided into World Bank income clusters such as high, upper-middle, lower-middle, and low-income economies for the period 1998 to 2019. For empirical analysis, this study utilized the Cross-Sectionally Augmented ARDL (CS-ARDL) and the Common Correlated Effect Mean Group (CCEMG) techniques robust to numerous econometric problems. In low-income countries, results indicate that outward FDI internationalization activities have adverse effect on economic growth, and the impact of home country institutions in stimulating outward FDI-induced growth appears weak both in the short term and long-term. In the case of high income, upper-middle income and lower-middle income countries, finding highlights that the joint impact of outward FDI and home country institutions stimulate higher economic growth and accelerate economic integration into the global economy. These impacts were found to diminish moving from high to low-income countries, which suggests that home country institutional development and income economy level matters for outward FDI-induced growth effects. The study also discusses key implications for policy.

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Public Policies Influence on Fiscal Deficit in the EU-28: Common Correlated Effects Approach

Cited by 3 publications

References 35 publications

Coordination vs. Competitiveness of Effective Average Tax Rates in Relation to FDI: The Case of Emerging EU Economies

Coordination vs. Competitiveness of Effective Average Tax Rates in Relation to FDI: The Case of Emerging EU Economies

Fiscal Adjustments in the European Union versus West Balkans economies: Evidence from Heterogeneous Panels

Global Outward Foreign Direct Investment and Economic Growth Across Income Groups: The Mediating Effect of Home Country Institutions

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