Posted on 15 February 2014. Tags: economic growth, fiscal policy, public debt
According to Mankiw (2000), fiscal policy in major macroeconomic models adversely affects the behavior of private agents as consumers and firms and they affect economic growth through investment and savings decisions. Increasing government spending will increase the aggregate demand for goods and services and money demand in the money market leading to an increase of interest rates while markets tend towards equilibrium. The increased interest rates affect negatively the level of private investment. To assess the effect of fiscal policy on economic growth generally are used the endogenous growth models, which include technological progress as an integrated part of this model. These models were called endogenous because they were taking into account long-term economic growth and were using endogenous mechanisms to explain its main source which is the technological progress. Endogenous growth models developed by Barro (1990), Mendosa, Milesi-Ferreti and Asea (1997) or even by other economists, predict that the fiscal policy can affect the level of product and the long run economic growth. This conclusion is analyzed in the theory of Barro (1990), which extends the model by including the fiscal policy. The Barro’s model is the model used in this paper to analyze the effect of the fiscal policy on economic growth in the case of Albania. The empirical work shows that all the variables, except inflation which according to theoretical expectations should have a negative effect, affect positively the economic growth. This positive relation between these variables can be explained by investments in infrastructure and other priority sectors that the government has done during all this period.
Empirical Evidence of Fiscal Policy Impact on Endogenuos Models of Economic Growth - the Case of Albania (281.3 KiB, 2,442 hits)
Posted in Economics, Volume IV, Issue no. 1
Posted on 15 October 2012. Tags: economic growth, fiscal policy, quality of public sector, size of public sector
The impact of fiscal policy on economic growth is a complex and contradictory topic in finance debates. Government influences real economy through the impact of public revenues and expenditures on the quantity and quality of production factors, labor and capital. High taxation for supporting big public sector can impede growth. On the other hand, some of the public expenditures can stimulate growth. This opposite effects of the public sector’s intervention through fiscal policy rise the debate about the performance of public sector in stimulating economic growth. The aim of this paper is to analyze the differences between developed UE countries and former communist EU countries regarding the public sectors and economic growth
Correlation Between Government and Economic Growth - Specific Features for 10 Nms (302.7 KiB, 7,388 hits)
Posted in Knowledge Management, Volume II, Issue no. 5
Posted on 15 June 2012. Tags: fiscal adjustment, fiscal expansions, fiscal policy, public expenditures, public revenues
Current financial and economical context brings new challenges for most of the countries – the decrease of public revenues and the incapacity to adjust the public expenditures. This article aims to identify the applied strategies for large discretionary fiscal changes – fiscal adjustments and fiscal expansions for the period 1996-2011 in European Union countries – through changes in public revenues or public expenditures, and the effects on the economic growth process. Using data for fiscal adjustments (improve more than 1.5 percentage points of the budget balance) and for fiscal expansions (deterioration more than 1.5 percentage points of the budget balance), there are analysed the strategies and the consequences for reducing/increasing the deficit.
Authors: Fiscal Policy In European Union Countries – A Comparative Analysis Of Adjustment And Expansions Fiscal Policy Episodes (267.7 KiB, 2,845 hits)
Posted in Economics, Volume II, Issue no. 3
Posted on 15 June 2012. Tags: economic development, economic growth, EU, fiscal policy, panel data
This article aims to demonstrate the confirmation or the refutation of the hypothesis that there is a connection between fiscal policy and economic development. The study begins with an overview of the main theoretical contributions. A few indicators that give the measure of the economic development are analysed for the sample of the Central and South Eastern European countries, members of the EU. The empirical analysis seeks to establish the relevance of the main determinants of the economic development (GDP per capita) and the three levers of the fiscal policy (fiscal pressure, the share of public expenditure in GDP and budgetary balance in the share of GDP), for each country, of the sample of the 12 countries of Central and South Eastern Europe, the new members of the European Union, during 2001-2010.
Econometric model Concerning The Impact Of The Fiscal Policy Upon The Economic Development. The Case Of The Countries From Central And Eastern Europe, Members Of The European Union (265.0 KiB, 4,290 hits)
Posted in Economics, Volume II, Issue no. 3
