Asymmetric effects of fiscal policy in EU and OECD countries
Jernej Mencinger,
Aleksander Aristovnik and
Miroslav Verbič
Economic Modelling, 2017, vol. 61, issue C, 448-461
Abstract:
In this article, we take account of an evaluation of the short- and medium-term effects of the transmission mechanism of fiscal policy in EU and OECD countries and their dependence on the state of the economy and fiscal behaviour. Our findings indicate that (i) across EU member states the impact of government spending on economic performance is larger in the accession than in core member states, (ii) since the onset of the economic/financial crisis the government spending multipliers have become larger in both core and accession EU member states, and (iii) a comparison with fiscal responses in the OECD countries shows robustness of our estimates. The conclusion implies that the austerity measures present a substantial drag for economic activity in accession EU countries. Thus, we may state that not considering the fiscal behaviour and state of the economy gives misleading fiscal multiplier effects, which in turn lead to the adoption of inappropriate fiscal measures that even worsen a country's economic situation.
Keywords: Fiscal policy; Fiscal multiplier; Government spending; Fiscal stance/behaviour; OECD (search for similar items in EconPapers)
JEL-codes: E32 E62 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:61:y:2017:i:c:p:448-461
DOI: 10.1016/j.econmod.2016.12.023
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