The impact of monetary and fiscal policy variables on the EU economic growth. Panel data analysis

Stawska, Joanna; Miszczyńska, Katarzyna

doi:10.9770/jesi2022.9.4(20)

Cited by 2 publications

(4 citation statements)

References 28 publications

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“…However, the relationship between monetary policy and economic development is negative and statistically significant, suggesting that expansionary monetary policy has promoted economic development and employment to some extent, through a slight increase in inflation. These findings are in line with recent research showing that variable monetary and fiscal policies impact economic development [21].…”

Section: Structural Model Assessmentsupporting

confidence: 92%

“…It is important to note that previous literature has mainly focused on the EU as a whole [10][11][12][13], EMU [14][15][16][17], or on specific EU countries [18][19][20]. Moreover, most previous studies have used a variant of regression analysis [21], which is not able to analyze the effects of monetary and fiscal policies simultaneously and efficiently incorporate their indirect effects. Accordingly, this study's contribution lies in the following:…”

Section: Introductionmentioning

confidence: 99%

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Evaluating the Outcomes of Monetary and Fiscal Policies in the EU in Times of Crisis: A PLS-SEM Approach

et al. 2023

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The asymmetric level of integration within the European Union (EU) regarding membership in the European Monetary Union (EMU) has resulted in inconsistent responses to crises such as the Great Recession of 2007–2009 and the European sovereign debt crisis of 2010–2013. Furthermore, it has led to varying outcomes of monetary and fiscal policies implemented across EU countries. This paper aims to investigate the impact of monetary and fiscal policies on economic development and employment through the inflation channel in the EU between 2007 and 2015, using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that the outcomes of monetary policy have been mixed between EMU and non-EMU countries, resulting in different measures and negative spillover effects of the European Central Bank’s (ECB) policy on countries outside of the EMU. Meanwhile, the ability of fiscal policy to lower inflation and boost economic growth and employment has been limited, which means that the impact of fiscal policy on both economic development and employment and inflation has been minor. Based on the findings of this study, there should be better coordination of monetary and fiscal policies at the EU level to support the macroeconomic stability of the Union during times of crisis.

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Section: Structural Model Assessmentsupporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Evaluating the Outcomes of Monetary and Fiscal Policies in the EU in Times of Crisis: A PLS-SEM Approach

et al. 2023

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“…As researchers (e.g. Stawska & Miszczyńska, 2022) prove, the monetary and fiscal policy have a significant impact on the economy.…”

Section: Discussionmentioning

confidence: 99%

“…Moreover, we should not forget how important the interaction between monetary and fiscal policy is in conducting macroeconomic policy. Stawska and Miszczyńska (2022), Chugunov et al (2021), Monamodi (2019) analyze the impact of variables in the area of monetary and fiscal policy on the economies of EU countries.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Selected method for determining fiscal targeting rules: Results for Poland

Przybylska-Mazur

2024

IER

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The objective of the article is the presentation of a selected method for determining fiscal targeting rules. The proposed fiscal rules make it possible to achieve the intended goals. In this article, the main goal of fiscal policy was the minimisation of deviations of the general government debt-to-GDP ratio from the target value. In the proposed method for determining fiscal targeting rules, we also considered the minimalisation of deviation of the inflation rate and output gap from their target values. We present the results of the empirical analysis for Poland. Research Design & Methods:The main design was quantitative. We used the modelling method. We applied the dynamic optimisation method for determining fiscal targeting rules. The fiscal targeting rule was the solution of selected dynamic optimisation problems with an infinite time horizon and discounting. We used the minimisation problem of the intertemporal loss function. We performed empirical analysis for quarterly data from the first quarter of 2011 to the third quarter of 2022 for Poland. We used the Bellman equation and the envelope theorem. Findings: In this article, we determined the fiscal targeting rule. This rule, determined as a solution to the minimisation problem of the intertemporal loss function, allows for the calculation of optimal values of the general government debt-to-GDP ratio while also considering the minimisation of deviations of the inflation rate and the output gap from their target values. We could observe the same direction of the optimal values of the debt-to-GDP ratio in different considered cases, but there is a different shift along the axis of ordinates. We could observe that reducing debt during good economic times allows for achieving an acceptable level of the debt-to-GDP ratio during a crisis. Implications & Recommendations:To minimise the intertemporal loss function, a portion of the financial resources accumulated during non-exceptional periods should be utilised during crises and shock events. Considering other variables such as inflation and the output gap when deciding on the value of the debt-to-GDP ratio, we noted that the fiscal convergence criterion for debt was not always fulfilled. Contribution & Value Added:In this article, we present a method of determining fiscal rules not only considering the general government debt-to-GDP ratio, but also considering such variables as the inflation rate and the output gap, as well as other variables such as general government balance to GDP ratio and the monetary policy instrument -the interest rate. The novelty of the article is also the determination of the fiscal targeting rule as a solution to the minimisation problem of intertemporal loss function. Thus, they make it possible to determine the optimal general government debt-to-GDP ratio, considering also the minimisation of deviations from the inflation rate and the output gap from their target values. Article type:research article

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The impact of monetary and fiscal policy variables on the EU economic growth. Panel data analysis

Cited by 2 publications

References 28 publications

Evaluating the Outcomes of Monetary and Fiscal Policies in the EU in Times of Crisis: A PLS-SEM Approach

Evaluating the Outcomes of Monetary and Fiscal Policies in the EU in Times of Crisis: A PLS-SEM Approach

Selected method for determining fiscal targeting rules: Results for Poland

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