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Determinants of Non-Linear Effects of Fiscal Policy on Output: The Case of Bulgaria

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  • Vladimirov Vladimir

    (University of Economics - Varna, Varna, Bulgaria)

  • Neycheva Maria

    (Burgas Free University, Burgas, Bulgaria)

Abstract

The paper illuminates the non-linear effects of the government budget on short-run economic activity. The study shows that in the Bulgarian economy under a Currency Board Arrangement the tax policy impacts the real growth in the standard Keynesian manner. On the other hand, the expenditure policy exhibits non-Keynesian behavior on the short-run output: cuts in government spending accelerate the real GDP growth. The main determinant of this outcome is the size of the discretionary budgetary changes. The results imply that the balanced budget rule improves the sustainability of public finances without assuring a growth-enhancing effect.

Suggested Citation

  • Vladimirov Vladimir & Neycheva Maria, 2009. "Determinants of Non-Linear Effects of Fiscal Policy on Output: The Case of Bulgaria," South East European Journal of Economics and Business, Sciendo, vol. 4(1), pages 51-61, April.
    • Handle: RePEc:vrs:seejeb:v:4:y:2009:i:1:p:51-61:n:4
    DOI: 10.2478/v10033-009-0004-5
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    Cited by:

    1. Wissem Khanfir, 2019. "Keynesian or Non-keynesian Effects of Fiscal Policy Changes: the Case of Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(1), pages 335-347, March.
    2. Chibi Abderrahim & Chekouri Sidi Mohamed & Benbouziane Mohamed, 2019. "The Impact of Fiscal Policy on Economic Activity over the Business Cycle: An Empirical Investigation in the Case of Algeria," Review of Middle East Economics and Finance, De Gruyter, vol. 15(3), pages 1-23, December.

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