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Macroeconomic Effects of Budget Expenditure in Bulgaria (Econometric Analysis)

Author

Listed:
  • Nikolay Velichkov

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

This article studies the short-term and long-term impact of expenditure fiscal policy on the macroeconomic activity in Bulgaria. The study is based on an econometric analysis that uses vari­ous econometric techniques within an established algorithm following the logical schema of vector au­toregression models that look at the characteristics, the significance, and the quantitative expressions of the studied relationships. The resulting empiri­cal data shows that long-term budget expenditure increase stimulates real GDP growth, providing that expenditure has not reached marginal levels. This macroeconomic activity driving effect is observed when capital expenditure increases, while current expenditure growth has no impact that is statistically significant. In short periods of economic up­turn, the expenditure fiscal policy should address the ratio between the different types of expenditure, giving priority to capital over current expenditure. In times of economic downturn, expansionary fiscal measures associated with increase in both capi­tal and current expenditure have the capacity to stimulate economic growth and help limit the drop in macroeconomic activity

Suggested Citation

  • Nikolay Velichkov, 2016. "Macroeconomic Effects of Budget Expenditure in Bulgaria (Econometric Analysis)," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 70-83, April.
    • Handle: RePEc:nwe:iisabg:y:2016:i:2:p:70-83
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    File URL: http://www.unwe.bg/uploads/Alternatives/6-Velichkov-2-2016.pdf
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    Citations

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    Cited by:

    1. Bogdan Klepacki & Barbara Kusto & Piotr Bórawski & Aneta Bełdycka-Bórawska & Konrad Michalski & Aleksandra Perkowska & Tomasz Rokicki, 2021. "Investments in Renewable Energy Sources in Basic Units of Local Government in Rural Areas," Energies, MDPI, vol. 14(11), pages 1-17, May.

    More about this item

    Keywords

    expenditure fiscal policy; macroeconomic activity; econometric analysis;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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