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Fiscal Impacts on Output in a Small Open Economy: The Case of Albania


  • Patonov Nikolay

    () (South-West University “Neofit Rilski” Blagoevgrad, Bulgaria)


The paper is intended to study the effects of total government spending and tax revenue on the annual GDP growth rate in Albania. On this base, we can examine whether and to which extent the macroeconomic governance could rely on those fiscal instruments in terms of a small open economy. The empirical methodology is based on regression analysis which includes OLS estimation on simply specified regression model and Vector Autoregressive estimates. The results support the assumptions that government expenditure is a weak instrument for policy impacts and the government must rely on taxation to stimulate economic growth.

Suggested Citation

  • Patonov Nikolay, 2016. "Fiscal Impacts on Output in a Small Open Economy: The Case of Albania," Scientific Annals of Economics and Business, Sciendo, vol. 63(2), pages 161-169, June.
  • Handle: RePEc:vrs:aicuec:v:63:y:2016:i:2:p:161-169:n:2

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    References listed on IDEAS

    1. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    2. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
    3. Dirk V Muir & Anke Weber, 2013. "Fiscal Multipliers in Bulgaria; Low But Still Relevant," IMF Working Papers 13/49, International Monetary Fund.
    4. Todorov Ivan Krumov, 2014. "Macroeconomic Trends in the New Member Countries of the European Union Before the Euro Area Debt Crisis," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 197-217, December.
    5. Cheryl Gray & Tracey Lane & Aristomene Varoudakis, 2007. "Fiscal Policy and Economic Growth : Lessons for Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 6883.
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