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Effects of fiscal consolidation in Western Balkan Countries

Author

Listed:
  • Milenko Krajišnik

    (University of Banja Luka, Faculty of Economics, Majke Jugoviæa 4, 7800 Banja Luka, Bosnia and Herzegovina)

  • Dragan Gligoriæ

    (University of Banja Luka, Faculty of Economics, Majke Jugoviæa 4, 7800 Banja Luka, Bosnia and Herzegovina)

  • Biljana Gojkoviæ

    (Economic Policy and Public Finances Department, Fiscal Council of the Republic of Srpska, Trg Republike 8/XIII Banja Luka, Bosnia and Herzegovina)

Abstract

The global economic crisis has not spared the countries of the Western Balkans. The ensuing recession, characterized by a decline in economic activity, a decline in consumption and an increase in unemployment, went hand in hand with drops in public revenues. This in turn resulted in budget imbalances that manifested in structural budget deficits and higher public debt. Fiscal consolidation was deemed necessary across the board. In this process, certain fiscal policy elements varied among countries. The structure of public revenues and public expenditures changed. The question is whether the fiscal consolidation was successful and to what extent. Dynamic panel analysis using PMG estimator in six Western Balkan Countries for the period 2004-2016 has shown that fiscal consolidation has positive impact on economic growth in this region. So, Western Balkan Countries have to conduct responsible public finances in order to encourage economic growth.

Suggested Citation

  • Milenko Krajišnik & Dragan Gligoriæ & Biljana Gojkoviæ, 2019. "Effects of fiscal consolidation in Western Balkan Countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 37(2), pages 527-551.
    • Handle: RePEc:rfe:zbefri:v:37:y:2019:i:2:p:527-551
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    References listed on IDEAS

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    Cited by:

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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