Macroeconomic effects of the budget deficit in the Republic of Macedonia

Noveski, Martin

doi:10.2478/crebss-2018-0008

Cited by 6 publications

(3 citation statements)

References 13 publications

(7 reference statements)

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“…The results, among others show that budget deficit indeed crowds out private investment in Pakistan. Also, Noveski (2018) probe the impact of the budget deficit on Gross Domestic Product (GDP) per capita in Macedonia using a multiple regression model with data spanning from 1996 to 2015. The results indicate that budget deficit does not affect significantly the GDP per capita; thus, supporting the Ricardian equivalence theory.…”

Section: Empirical Literaturementioning

confidence: 99%

Macroeconomic Effects of Budget Deficit in Nigeria

Akamobi

Unachukwu²

2021

EJEFR

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This study probed the macroeconomic effects of budget deficit in Nigeria. Specifically, it seeks to probe the effect of budget deficit on private investment and public investment in Nigeria by adopting the ADF unit root test and ARDL model, Granger Causality test and the short-run diagnostics and stability using annual time series data covering 37 years from 1981 to 2019. The variables employed include – Growth rate of real gross domestic product, private investment (Gross Fixed Capital Formation) as a percentage of GDP, public investment measured as ratio government capital expenditure to GDP, budget deficit, money supply measured as ratio of GDP, inflation rate measured by annual year-on-year inflation rate, interest rate, labour force participation rate. The research findings admitted that, budget deficit have positive and significant impact on economic growth in Nigeria. Therefore, government budget deficit has no crowding out effect on investment. The study also reveals that budget deficit has negative and insignificant impact on private investment in Nigeria. In addition, further investigation shows budget deficit have positive and significant impact on public investment in Nigeria. Also, the study asserts that there is unidirectional causality running from budget deficit to economic growth, private investment and public investment. Based on the research findings of this study, Government must ensure and maintain strong fiscal discipline without compromising the wellbeing of the citizenry by allocating budget spending to sectors that can translate the deficit into high economic growth both in the short and long runs. Furthermore, budget deficit financing in Nigeria should be focused on the productive sectors of the economy. This is because deficit financing has merely resulted in economic instability indicating that sound policies are needed to achieve economic stability in Nigeria. JEL: E02, H61, E22 Article visualizations:<img src="/-counters-/edu_01/0778/a.php" alt="Hit counter" />

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Section: Empirical Literaturementioning

confidence: 99%

Macroeconomic Effects of Budget Deficit in Nigeria

Akamobi

Unachukwu²

2021

EJEFR

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“…Margani and Ricciutii 2004 Their results indicated the existence of the twin deficit hypothesis in oil producing countries, and the Ricardian equivalence proposition in non-oil countries. These contradictory results could be explained with the different levels of integration of the countries in the world financial markets (Köhler, 2005), level of the development of the country, its socio-economic and political environment and the employed quantitative methods (Noveski, 2018).…”

Section: Theoretical Framework and Literature Reviewmentioning

confidence: 99%

Testing the Twin Deficit Hypothesis: Evidence from the Republic of North Macedonia

Bucevska

2020

Business Systems Research Journal

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BackgroundAn econometric analysis of the twin deficit hypothesis is of special importance for the Republic of North Macedonia in view of its perspective membership in the European Union and from the point of view of its macroeconomic stability in the long run.ObjectivesThe objective of this paper is to test empirically the validity of the twin deficit hypothesis in the Republic of North Macedonia.Methods/ApproachTo achieve this objective, we used actual quarterly data on Macedonia's budget and the current account deficit in the period from the first quarter of 2005 until the fourth quarter of 2017 and applied several econometrics methods: the Granger causality, a vector autoregressive (VAR) and a vector error correction model (VECM).ResultsThese findings point to the conclusion that efforts focused on improving the current account imbalances through fiscal policy will be inefficient in the short run.ConclusionsHowever, the existence of a long run relationship between the budget deficit and the current account deficit indicates the necessity of policy initiatives focused not only on reducing the budget deficit, but also on improving the external position of the country though export promotion.

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“…Research on the impact of budget deficit policy on economic growth that support's Richardian group is done by Ghali (Ghali, 1997), Velnampy and Achchuthan (Velnampy, T and Achchuthan, 2013) and Noveski (Martin Noveski, 2018)the expansionary fiscal policy in Macedonia can still be felt, primarily through an increased level of public expenditures aimed at stimulation of the economic growth. From 2008 onwards, the Republic of Macedonia has continuously recorded a negative budget balance, which affects the resources allocation and the overall economic situation.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Government Consumption and Government Investment as Intervening Variables to Growth in Indonesia

Suparjito

Sarungu

Soesilo

et al. 2020

JEP

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Fiscal policy and monetary policy are the two macroeconomic policies used by the government and monetary authorities in order to create a stable economy. The budget deficit policy is one form of fiscal policy implemented by the government in order to realize a high level of economic growth, a controlled inflation rate and open up new job opportunities to reduce unemployment. The impact of the implementation of the budget deficit policy on the level of economic growth is a long debate. Neoclassical groups argue that the implementation of budget deficit policies is detrimental to the economy, as it lowers the rate of economic growth. Keynesian groups argue that the implementation of the budget deficit policy is very good for the economy, because it triggers the rate of economic growth by increasing the number of demand for goods and services through increased government spending. While the Richardian people argue that the implementation of budget deficit policy has no effect on the economy. The data used in this study is data from 1981-2014 which consists of budget deficit, government consumption, government investment and economic growth rate. The method of analysis in this research is using Partial Least Square-Path Modeling (PLS-PM) approach with SMART-PLS analysis tool which aims to analyze the direct and indirect influence of the implementation of budget deficit policy toward the level of economic growth through government consumption and government investment. The results show that the implementation of the budget deficit policy can increase economic growth through increased government investment spending. Keywords: budget deficits, government investment, government consumption, growth.

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Macroeconomic effects of the budget deficit in the Republic of Macedonia

Cited by 6 publications

References 13 publications

Macroeconomic Effects of Budget Deficit in Nigeria

Macroeconomic Effects of Budget Deficit in Nigeria

Testing the Twin Deficit Hypothesis: Evidence from the Republic of North Macedonia

The Effect of Government Consumption and Government Investment as Intervening Variables to Growth in Indonesia

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