Macroeconomic effects of fiscal policy shocks: panel VAR evidence from MENA countries

Somayeh Sedighi, Samaneh Raiss Shaghaghi and Gabriel Temesgen Woldu

Macroeconomics and Finance in Emerging Market Economies, 2024, vol. 17, issue 2, 212-226

Abstract: This study examines discretionary fiscal policy effects on output by employing a Panel VAR model in MENA countries during 1990–2018. the results demonstrate fiscal multipliers are larger when public debt is low, at a high institutional quality, and during recession periods. Contrary to empirical studies, we found the response of output to fiscal shocks is larger at a low level of financial development. Our findings have significant policy implications focusing on fiscal policy mix in downturns of an economy, lower levels of public debt, lower levels of financial development, and a higher level of institutional quality.

Date: 2024
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DOI: 10.1080/17520843.2021.1995248

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