Output effects of fiscal stimulus in Central and Eastern European countries

Jean-Louis Combes, Alexandru Minea, Lavinia Mustea and Thierry Yogo ()

Post-Communist Economies, 2016, vol. 28, issue 1, 108-127

Abstract: In spite of the rapidly growing research on fiscal multipliers over recent years, little evidence has been so far accumulated in developing and emerging economies. This paper investigates the nature and the size of fiscal multipliers in Central and Eastern European (CEE) countries. Unlike most of the existing literature, we draw upon a panel vector error correction model, which appropriately captures the common long-term path of CEE countries, while allowing for different short-run dynamics, in an integrated setup. Our main results show that the spending multiplier is positive, but low on average. Moreover, its sign, significance and magnitude vary across CEE. Finally, both impulse and cumulative fiscal multipliers are sensitive to a wide range of CEE characteristics, including the exchange rate regime, the level of economic development, the fiscal stance and the openness degree.

Date: 2016
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Working Paper: Output effects of fiscal stimulus in Central and Eastern European countries (2016)
Working Paper: Output effects of fiscal stimulus in Central and Eastern European Countries (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:pocoec:v:28:y:2016:i:1:p:108-127

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DOI: 10.1080/14631377.2015.1124559

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