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Dynamic effects of fiscal policy and fiscal multipliers in Croatia

  • Hrvoje Simovic

    ()

    (University of Zagreb, Faculty of Economics & Business, Zagreb, Croatia)

  • Milan Deskar-Skrbic

    (Arhivanalitika d.o.o., Zagreb, Croatia, University of Zagreb, Faculty of Economics & Business, Zagreb, Croatia)

The aim of this paper is to analyze the effects of discretionary measures of fiscal policy on the economic activity and to estimate the size of fiscal multipliers in Croatia. Econometric framework is based on the structural VAR model (SVAR), with Blanchard-Perotti identification method that uses information on institutional characteristics of fiscal system. The analysis is conducted on quarterly data for total expenditures and indirect taxes of central, central consolidated and general consolidated government and aggregate demand for the period from 2004-2012. The results show that our initial assumptions about the difference in the size of the multiplier of government expenditures and indirect tax revenues between three levels of government consolidation have been confirmed.

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Article provided by University of Rijeka, Faculty of Economics in its journal Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics.

Volume (Year): 31 (2013)
Issue (Month): 1 ()
Pages: 55-78

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Handle: RePEc:rfe:zbefri:v:31:y:2013:i:1:p:55-78
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  1. Olivier Blanchard & Roberto Perotti, 1999. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," NBER Working Papers 7269, National Bureau of Economic Research, Inc.
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  12. Eric M. Leeper & Alexander W. Richter & Todd B. Walker, 2012. "Corrigendum: Quantitative Effects of Fiscal Foresight," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 283-283, August.
  13. Wendy Edelberg & Martin Eichenbaum & Jonas D.M. Fisher, 1999. "Understanding the Effects of a Shock to Government Purchases," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 166-206, January.
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