MACROECONOMIC EFFECTS OF FISCAL CONSOLIDATION IN EU POST-TRANSITION COUNTRIES

Pasko Burnac ()
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Pasko Burnac: University of Split

Economic Thought and Practice, 2017, vol. 26, issue 1, 219-240

Abstract: Fiscal consolidation or fiscal adjustment are macroeconomic terms that indicate the process of harmonization of public revenue and public expenditure by reducing expenditures and / or increasing revenues. Studies that examine the macroeconomic and fiscal effects of consolidation in developed countries are rare and of rather recentdate, while the same effects in the post-transition countries are completely uninvestigated. This paper tries to shed some light on this relationship.epaper studies the macroeconomic and fiscal variables before, during and after the period of consolidation and identifies changes to these variables having occurred during and after consolidation. The research results do not support the expansionary fiscal consolidation hypothesis. Therefore, descriptive analysis suggests that apart from minor corrections of the exchange rate and reduced labour costs, fiscal consolidation in the post-countries was not successful in achieving macroeconomic goals such as economic growth and reduced unemployment.

Keywords: fiscal consolidation; post-transition countries; economic growth (search for similar items in EconPapers)
JEL-codes: E62 H62 P24 (search for similar items in EconPapers)
Date: 2017
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