Assessing the Connection between Fiscal Policy and Private Consumption in Four Euro Area Candidates

Leonte Alexandru ()
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Leonte Alexandru: The Academy of Economic Studies, Bucharest

Ovidius University Annals, Economic Sciences Series, 2010, vol. X, issue 2, 424-427

Abstract: The study of private sector response to fiscal policy decisions is a topic of macroeconomic research which has drawn much attention throughout the years. This paper studies the connection between budget deficits and private spending in Romania and other three euro area candidate countries, Hungary, Poland and the Czech Republic. Our results show a rather weak connection between the dynamic of the fiscal policy variables (government spending or fiscal deficit) and the dynamic of private consumption for all countries except Poland, which indicates that a fiscal stimulus has a good chance of being effective in this country. Also, we found that the dynamic of public debt is significantly and positively related to private consumption for all countries except Romania.

Keywords: fiscal stimulus; Ricardian behavior; Keynesian behavior; fiscal multiplier; economic crisis (search for similar items in EconPapers)
JEL-codes: E21 E62 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:10:y:2010:i:2:p:424-427

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