Panel data evidence on non-Keynesian efects of fiscal policy in the EU New Member

Paweł Borys, Piotr Ciżkowicz () and Andrzej Rzońca

MPRA Paper from University Library of Munich, Germany

Abstract: There is growing evidence that fiscal consolidation may contribute to economic growth even in the short term. In this paper we review recent research on such non-Keynesian fiscal policy effects and apply panel data econometric techniques to examine the consequences of fiscal consolidation in the EU New Member States. We extend the analysis to test potential channels through which non-Keynesian effects may operate. The results confirm that composition of the consolidation determines the output response. Moreover, we find evidence that all types of fiscal consolidations stimulate private investments, while export acceleration is observed only when consolidations involve mostly expenditure curtailment. Private consumption reaction to fiscal policy shows signs of nonlinearity - in the case of minor adjustments Keynesian effects dominate, but they are cancelled out when sizable consolidations are considered.

Keywords: fiscal consolidation; non-Keynesian efects; New Member States; panel data (search for similar items in EconPapers)
JEL-codes: C23 D81 E23 E32 E44 E62 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-eec, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Panel Data Evidence on the Effects of Fiscal Policy Shocks in the EU New Member States (2014)
Working Paper: Panel data evidence on the effects of fiscal impulses in the EU New Member States (2013)
Working Paper: Panel data evidence on effects of fiscal impulses in the EU New Member States (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:32696

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