IDEAS home Printed from https://ideas.repec.org/a/rjr/romjef/vy2019i3p132-147.html
   My bibliography  Save this article

Keynes versus Laffer or Misleading Perspectives against Normal Evolution

Author

Listed:
  • Delia-Elena DIACONAŞU

    (Corresponding author, Department of Research, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi)

  • Ion POHOAŢĂ

    (Department of Economics and International Relations, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi)

  • Oana-Ramona SOCOLIUC

    (Department of Economics and International Relations, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University of Iasi)

Abstract

Having as theoretical support the innovative and opposed aspects of the Keynesian and the supply-side doctrines, this article aims to analyze the effects of fiscal policy, its strength and duration on economic growth. Using a SVEC framework on the example of Romania, we find that a hike in government expenditure was not too efficient in promoting economic development during the 2000-2018 period. The results show that the government spending shocks have a quite small and short-lived effect on GDP, do not boost consumption and lead to important “crowding-out” effects. In addition, our findings indicate that an increased government debt dilutes the efficiency of fiscal policy. We find quite low impact and cumulative government spending multipliers.

Suggested Citation

  • Delia-Elena DIACONAŞU & Ion POHOAŢĂ & Oana-Ramona SOCOLIUC, 2019. "Keynes versus Laffer or Misleading Perspectives against Normal Evolution," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 132-147, September.
    • Handle: RePEc:rjr:romjef:v::y:2019:i:3:p:132-147
    as

    Download full text from publisher

    File URL: http://www.ipe.ro/rjef/rjef3_19/rjef3_2019p132-147.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    fiscal policy; economic growth; structural vector error correction model; crisis; Romania;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rjr:romjef:v::y:2019:i:3:p:132-147. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Corina Saman (email available below). General contact details of provider: https://edirc.repec.org/data/ipacaro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.