Fiscal Multiplier Determinants in the CESEE Region

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Milan Deskar-Śkrbić
https://orcid.org/0000-0002-7611-2071
Hrvoje Śimović
Antonija Buljan
https://orcid.org/0000-0002-0980-5206

Abstract

In this paper we use the panel VAR model with exogenous variables to analyse the effects of various structural characteristics of the economies on the effectiveness of government consumption in the Central Eastern and Southeastern European region (CESEE). More precisely, we analyse the effects of government consumption on economic growth in this region, controlling for the effects of the size of the economy, level of public debt, level of tax burden, openness of the economy, rigidity of the labour market, monetary regime and the phase of the business cycle. Our results indicate that these characteristics have a significant impact on the effectiveness of fiscal policy (in terms of the size of the fiscal multiplier). Also, these effects are in line with the theoretical assumptions as the recessionary phase of the cycle, size of the economy, rigidity of the labour market and the fixed exchange rate regime increase the average size of fiscal multipliers while tax burden, indebtedness and openness of the economies reduce the size of the fiscal multiplier, when compared to the base model.

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How to Cite
Deskar-Śkrbić, M., Śimović, H., & Buljan, A. (2019). Fiscal Multiplier Determinants in the CESEE Region. Journal of Management and Financial Sciences, (29), 11–26. https://doi.org/10.33119/JMFS.2017.29.1
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