The cyclical character of fiscal policy in transition countries

Rilind Kabashi

No 2016-03, Working Papers from National Bank of the Republic of North Macedonia

Abstract: This study investigates the cyclical character of fiscal policy in transition countries in Central, Eastern and Southeastern Europe (CESEE) in the period from 1995 to 2011, using system GMM as the preferred estimation method for the underlying sample and model specification. The study finds discretionary policy in the CESEE EU Member States and in the Western Balkan countries to have been procyclical, thus aggravating economic fluctuations, whereas automatic stabilizers moved overall policy to an acyclical stance. In addition, the analysis indicates considerable differences in the cyclical character of fiscal policy between transition countries and the Western European EU Member States, where both overall fiscal policy and discretionary policy were acyclical. Finally, the study also offers several recommendations for policymakers, particularly in transition countries.

Keywords: fiscal policy; transition countries; European Union; system GMM (search for similar items in EconPapers)
JEL-codes: C33 E32 H62 (search for similar items in EconPapers)
Pages: 20
Date: 2016-08
New Economics Papers: this item is included in nep-mac and nep-tra
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Cyclical Character of Fiscal Policy in Transition Countries (2014)
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