Discretionary fiscal policy and economic activity in Greece

Athanasios Tagkalakis

No 169, Working Papers from Bank of Greece

Abstract: This paper investigates the effects of discretionary fiscal policy changes on economic activity and its subcomponents in Greece in the period 2000-2011. Changes in government spending and net taxes have Keynesian effects. An increase in government consumption has the most pronounced positive effects on output growth, private consumption and non-residential investment, while it reduces residential investment. Cuts in the public investment programme crowd in private investment, but are associated negatively with the net exports ratio. Both indirect and direct tax hikes lower private consumption, private investment and output growth. Additionally, higher direct taxes, by lowering disposable income, reduce import demand, thus, improving the trade balance.

Keywords: : Discretionary fiscal policy; economic growth; consumption; investment; net exports (search for similar items in EconPapers)
JEL-codes: E62 H30 O52 (search for similar items in EconPapers)
Pages: 69
Date: 2013-12
New Economics Papers: this item is included in nep-fdg, nep-mac, nep-pbe and nep-pub
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Citations: View citations in EconPapers (2)

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Journal Article: Discretionary fiscal policy and economic activity in Greece (2014)
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