IDEAS home Printed from https://ideas.repec.org/p/zag/wpaper/1510.html

The size and determinants of fiscal multipliers in Western Balkans: comparing Croatia, Slovenia and Serbia

Author

Listed:
  • Milan Deskar Škrbić

    (Erste & Steiermarkische bank)

  • Hrvoje Šimović

    (Faculty of Economics and Business, University of Zagreb)

Abstract

When estimating the size of fiscal multipliers one has to take into consideration various structural characteristics of economies which, directly or indirectly, affect the transmission from government stimuli to economic activity. Thus, in this paper we use a ‘bucket approach’ to determination of the size of fiscal multipliers, which enables us to make presumptions on the size of fiscal multipliers, given the structural characteristics of selected Western Balkan economies – Croatia, Slovenia and Serbia. After this ‘non-empirical’ approach we use structural VAR framework to test our hypothesis derived from the ‘bucket approach’. Our results confirmed the hypotheses on the relative size of the multipliers between these three peer countries, with Croatia having the highest spending multiplier and Slovenia the lowest one.

Suggested Citation

  • Milan Deskar Škrbić & Hrvoje Šimović, 2015. "The size and determinants of fiscal multipliers in Western Balkans: comparing Croatia, Slovenia and Serbia," EFZG Working Papers Series 1510, Faculty of Economics and Business, University of Zagreb.
    • Handle: RePEc:zag:wpaper:1510
    as

    Download full text from publisher

    File URL: http://web.efzg.hr/repec/pdf/Clanak%2015-10.pdf
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mirdala, Rajmund, 2009. "Effects of Fiscal Policy Shocks in the European Transition Economies," MPRA Paper 19481, University Library of Munich, Germany.
    2. Søren Ravn & Morten Spange, 2014. "The Effects of Fiscal Policy in a Small Open Economy with a Fixed Exchange Rate," Open Economies Review, Springer, vol. 25(3), pages 451-476, July.
    3. Stephan Barisitz, 2007. "Exchange Rate Arrangements and Monetary Policy in Southeastern Europe: An Update (2004–2007)," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 78-99.
    4. Olivier J. Blanchard & Daniel Leigh, 2013. "Growth Forecast Errors and Fiscal Multipliers," American Economic Review, American Economic Association, vol. 103(3), pages 117-120, May.
    5. Perotti, Roberto, 2002. "Estimating the effects of fiscal policy in OECD countries," Working Paper Series 168, European Central Bank.
    6. Alan J. Auerbach & Yuriy Gorodnichenko, 2013. "Corrigendum: Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 320-322, August.
    7. Andrew Mountford & Harald Uhlig, 2009. "What are the effects of fiscal policy shocks?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 960-992.
    8. Mr. Dirk V Muir & Miss Anke Weber, 2013. "Fiscal Multipliers in Bulgaria: Low But Still Relevant," IMF Working Papers 2013/049, International Monetary Fund.
    9. Mr. Jesus R Gonzalez-Garcia & Mr. Antonio Lemus & Mr. Mico Mrkaic, 2013. "Fiscal Multipliers in the ECCU," IMF Working Papers 2013/117, International Monetary Fund.
    10. Jesús Crespo Cuaresma & Markus Eller & Aaron Mehrotra, 2011. "The Economic Transmission of Fiscal Policy Shocks from Western to Eastern Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 44-68.
    11. Valerie A. Ramey, 2011. "Can Government Purchases Stimulate the Economy?," Journal of Economic Literature, American Economic Association, vol. 49(3), pages 673-685, September.
    12. Ilzetzki, Ethan & Mendoza, Enrique G. & Végh, Carlos A., 2013. "How big (small?) are fiscal multipliers?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 239-254.
    13. Nicoletta Batini & Mr. Luc Eyraud & Miss Anke Weber, 2014. "A Simple Method to Compute Fiscal Multipliers," IMF Working Papers 2014/093, International Monetary Fund.
    14. Ana GRDOVIĆ GNIP, 2015. "Empirical Assessment Of Stabilization Effects Of Fiscal Policy In Croatia," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 47-69, March.
    15. Milan Deskar-Škrbić & Hrvoje Šimović & Tomislav Ćorić, 2014. "The effects of fiscal policy in a small open transition economy: The case of Croatia," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 133-152, November.
    16. Jesús Crespo Cuaresma & Markus Eller & Aaron Mehrotra, 2011. "The Economic Transmission of Fiscal Policy Shocks from Western to Eastern Europe," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 44-68.
    17. Stephan Barisitz, 2004. "Exchange Rate Arrangements and Monetary Policy in Southeastern Europe and Turkey: Some Stylized Facts," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 95-118.
    18. Rafael Ravnik & Ivan Zilic, 2011. "The use of SVAR analysis in determining the effects of ?scal shocks in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 35(1), pages 25-58.
    19. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Fiscal Multipliers in Recession and Expansion," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 63-98, National Bureau of Economic Research, Inc.
    20. 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.
    21. Roberto Perotti, 2002. "Estimating the effects of fiscal policy in OECD countries," Economics Working Papers 015, European Network of Economic Policy Research Institutes.
    22. Ramey, Valerie A. & Shapiro, Matthew D., 1998. "Costly capital reallocation and the effects of government spending," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 145-194, June.
    23. Markus Eller, 2009. "Fiscal Position and Size of Automatic Stabilizers in the CESEE EU Member States – Implications for Discretionary Measures," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 78-84.
    24. Dario Caldara & Christophe Kamps, 2006. "What Do We Know About the Effects of Fiscal Policy Shocks? A Comparative Analysis," Computing in Economics and Finance 2006 257, Society for Computational Economics.
    25. Marie-Pierre Hory, 2016. "Fiscal multipliers in Emerging Market Economies: Can we learn something from Advanced Economies?," International Economics, CEPII research center, issue 146, pages 59-84.
    26. Dario Caldara & Christophe Kamps, 2017. "The Analytics of SVARs: A Unified Framework to Measure Fiscal Multipliers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(3), pages 1015-1040.
    27. Davor Zoricic & Silvije Orsag, 2013. "Parametric Yield Curve Modeling In An Illiquid And Undeveloped Financial Market," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 4(3), pages 243-252.
    28. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
    29. Ana Grdovic Gnip, 2014. "The power of fiscal multipliers in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 38(2), pages 173-219.
    30. Josef Schreiner, 2008. "Labor Markets in Central, Eastern and Southeastern European EU Member States: General Trends and Migration Effects," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 82-99.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. World Bank, 2020. "Serbia’s New Growth Agenda," World Bank Publications - Reports 33565, The World Bank Group.
    2. Agata Szymańska, 2018. "Wpływ polityki fiskalnej na PKB w krajach Unii Europejskiej spoza strefy euro," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 49-74.
    3. Dragan Tevdovski & Goran Petrevski & Jane Bogoev, 2019. "The effects of macroeconomic policies under fixed exchange rates: A Bayesian VAR analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2138-2160, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Milan Deskar-Škrbić & Hrvoje Šimović, 2017. "The effectiveness of fiscal spending in Croatia, Slovenia and Serbia: the role of trade openness and public debt level," Post-Communist Economies, Taylor & Francis Journals, vol. 29(3), pages 336-358, July.
    2. Ianc, Nicolae-Bogdan & Turcu, Camelia, 2020. "So alike, yet so different: Comparing fiscal multipliers across EU members and candidates," Economic Modelling, Elsevier, vol. 93(C), pages 278-298.
    3. Nicolae-Bogdan Ianc & Camelia Turcu, 2019. "So alike, yet so different: comparing fiscal multipliers across E(M)U candidates," Working Papers 2019.03, International Network for Economic Research - INFER.
    4. Milan Deskar-Škrbić & Hrvoje Šimović & Tomislav Ćorić, 2013. "Effects of Fiscal Policy in a Small Open Economy: Evidence of Croatia," EFZG Working Papers Series 1302, Faculty of Economics and Business, University of Zagreb.
    5. Hrvoje Simovic & Milan Deskar-Skrbic, 2013. "Dynamic effects of fiscal policy and fiscal multipliers in Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 31(1), pages 55-78.
    6. Agata Szymańska, 2018. "Wpływ polityki fiskalnej na PKB w krajach Unii Europejskiej spoza strefy euro," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 49-74.
    7. Goran Petrevski & Jane Bogoev & Dragan Tevdovski, 2016. "Fiscal and monetary policy effects in three South Eastern European economies," Empirical Economics, Springer, vol. 50(2), pages 415-441, March.
    8. Sonya Georgieva, 2021. "Fiscal Multipliers in Bulgaria and Central and Eastern Europe Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 131-167.
    9. Ramey, V.A., 2016. "Macroeconomic Shocks and Their Propagation," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 71-162, Elsevier.
    10. Jan Čapek & Jesús Crespo Cuaresma, 2020. "We just estimated twenty million fiscal multipliers," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(3), pages 483-502, June.
    11. Virkola, Tuomo, 2014. "Exchange Rate Regime, Fiscal Foresight and the Effectiveness of Fiscal Policy in a Small Open Economy," ETLA Reports 20, The Research Institute of the Finnish Economy.
    12. Andrea Boitani & Salvatore Perdichizzi, 2018. "Public Expenditure Multipliers in recessions. Evidence from the Eurozone," DISCE - Working Papers del Dipartimento di Economia e Finanza def068, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    13. Charles J. Whalen & Felix Reichling, 2015. "The Fiscal Multiplier And Economic Policy Analysis In The United States," Contemporary Economic Policy, Western Economic Association International, vol. 33(4), pages 735-746, October.
    14. Dragan Tevdovski & Goran Petrevski & Jane Bogoev, 2019. "The effects of macroeconomic policies under fixed exchange rates: A Bayesian VAR analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2138-2160, January.
    15. Goran Petrevski & Borce Trenovski & Biljana Tashevska, 2019. "The effectiveness of fiscal and monetary policies in a small open economy – the case of Macedonia," Post-Communist Economies, Taylor & Francis Journals, vol. 31(6), pages 805-821, November.
    16. Søren Ravn & Morten Spange, 2014. "The Effects of Fiscal Policy in a Small Open Economy with a Fixed Exchange Rate," Open Economies Review, Springer, vol. 25(3), pages 451-476, July.
    17. Atems, Bebonchu, 2019. "The effects of government spending shocks: Evidence from U.S. states," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 65-80.
    18. repec:uii:journl:v:6:y:2014:i:1:p:23-37 is not listed on IDEAS
    19. Cem Çebi & K.Azim Özdemir, 2021. "Cyclical variation of the fiscal multiplier in Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(2), pages 495-509, January.
    20. Valerie A. Ramey, 2019. "Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 89-114, Spring.
    21. Kuckuck, Jan & Westermann, Frank, 2014. "On the size of fiscal multipliers: A counterfactual analysis," Economics Letters, Elsevier, vol. 123(1), pages 26-32.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • 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:zag:wpaper:1510. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: WPS The email address of this maintainer does not seem to be valid anymore. Please ask WPS to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/fefzghr.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.