International Scientific Publications
© 2023 Science Events Ltd
Terms of Use  ·  Privacy Policy
Choose language English French Bulgarian
Conference room
Economy & Business 2024, 23rd International Conference
18-21 August, Burgas, Bulgaria
Call for Papers

Economy & Business, Volume 8, 2014

Besnik Fetai, Selajdin Abduli
Pages: 1035-1047
Published: 29 Aug 2014
Views: 3,557
Downloads: 859
Abstract: The objective of this paper is to investigate the effect of fiscal policy in small open transition economy. This paper employs, Granger- Causality test, Impulse Response Function and Forecast Error Decomposition, in order to assess the impact of fiscal policy on real GDP and prices. In this finding, all econometrics result do not show a conventional Keynesian effect of fiscal policy on real economic activity due to the counteracting effect of the monetary policy reaction. This causes a crowding out effect. Therefore, the results suggest that there is no coordination between fiscal and monetary policy. Moreover, the results from the Granger Causality test and Impulse Response Function show that the best fiscal policy for stimulating the economy appears to be one of tax-cuts. However, a change in taxation may produce a short-lived effect on real GDP; but, such action is likely to generate higher burdens in the future. In addition, the higher burdens are likely to have long-term consequences that far outweigh any short-term benefits in terms of real GDP.
Keywords: fiscal policy, economic growth, transition economies, granger – causality test, structural vector autoregressive
Cite this article: Besnik Fetai, Selajdin Abduli. MACROECONOMICS EFFECT OF FISCAL POLICY IN TRANSITION ECONOMIES: THE CASE REPUBLIC OF MACEDONIA. Journal of International Scientific Publications: Economy & Business 8, 1035-1047 (2014).
Download full text

Back to the contents of the volume
By using this site you agree to our Privacy Policy and Terms of Use. We use cookies, including for analytics, personalisation, and ads.